Question

If you were to obtain life insurance would you look to obtain a whole life or term policy? Describe each policy, discuss and defend your position. In order to get full points you must answer each element of the question.

Answer 1

I would prefer Term Policy.

1. Whole life policy is for the whole life , not a fixed term. Term Insurance is for a fixed term. I would prefer term insurance because it offers flexubility It does not bind you for life. After a few years you may need to increase or decrease your insurance cover , or you may not need the life insurance cover. In these uncertain times, flexibility is desired.Hence term insurance is prefereable

2. Whole life policy comes with an investment component. It is insurance plus investment clubbed together.

With whole life policy you commit yourself to a single investment for life. With changing time you need flexibility of investment instruement as well as amount of investment. With term insurance , you get only insurance . With balance savings you have a choice where and how much to invest in each year.

3.Term Life insurance are much more affordable , since you do not have to compulsorily make investment

In short term life insurance offers flexibility of  changing insurance cover and choosing ones investment instruement and amount of investment. Whole life insurance makes one commit fixed expenses and fixed amount of saving for whole life.