Question

In: Economics

In the 'Readings and Resources' tab, read the link relating to the different types of Life...

In the 'Readings and Resources' tab, read the link relating to the different types of Life Insurance covered in this unit. After reading this link, discuss what justifications you would use to recommend a Whole Life Insurance Policy as opposed to a Term Life Insurance policy. What do you think are the advantages of owning a Whole Life Policy vs a Term Policy? Use material from Kapoor to substantiate your position

http://www.finra.org/investors/insurance

Solutions

Expert Solution

The basic feeature of a Whole Life Insurance policy is that it provides coverage for the life of the insured and can build cash value, whereas in Term Life Insurance policy, the coverage takes place for a specified period or term. Now, logically, a person does not know when will he die or not. So these savings which he will get through insurance is the only way to his income. So taking a Whole Life Insurance is a better option than the latter.

Moreover, the premium that has to be paid increases term by term in the Term Life Insurance Policy which adds toi the costs and thus minimising the profit an individual expect from the insurance he is buying. This is not the case with Whole Life Insurance Policy where the premium amount remains the same throughout life.

Apart from that, the additional costs incurred by visiting the insurance offices to renew the term adds to its negative aspect in comparison to the Whole life insurance policy.

Hence in any way, taking a whole life insurance policy is fruitful when we think of the long term.


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