Difference of Whole Life Insurance and Term Life Insurance
- Period of Coverage. Whole life insurance will give you lifetime coverage. Depending on your policy, you can pay monthly, quarterly or annually. The payment will last as long as you are alive. However, your beneficiaries will receive the face amount of the policy regardless of the time of your death. Whether you die on your 20’s or 80’s, your family members will get the full death benefits that you paid for. Term life insurance on the other hand offers coverage only while the policy is active. Term insurance is offered in various coverage periods like 1 year, 5 years, 10 years, 20 years and 30 years. You will pay for your policy until its expiration. For instance, if you applied for a 5 year term life insurance, you will be paying for it for 5 years. If you died within that 5 years of coverage, your beneficiaries will receive full benefits. If you are still alive after the policy ended, you will not get anything from the amount that you paid as it was meant for your death benefits. If you want to continue being covered, you will then need to apply for a new policy.
- Premium Rates. Because whole life insurance offers lifetime coverage, the premium rate is higher than term life insurance. But as mentioned, term life insurance only offers limited coverage as it will end the moment the policy expires. You will not get any amount after the policy expires and you are still alive. Once the term life insurance expires and you apply for a new one, the premiums will usually increase. If you renew your term life policy frequently, your premium rate may be equal to the whole life insurance rate in the end.
- Cash Value. Whole life insurance has cash value while term life insurance does not. When you purchase term life insurance, you are only paying for your death benefits, which will be given to your beneficiaries upon your demise. That’s as long as the policy is still active. With the whole life insurance, part of the money you pay goes to its cash value. This is a type of savings, which you can withdraw or use on the right time. There is a specific period in which withdrawal of cash value will be allowed without any fees. If you withdraw before that period, you might incur extra charges. You may pay the money back so the amount will be added to your death benefits.
Term Life Insurance for SmokersSeveral clients decide to get term life insurance though it offers limited coverage because of its cheaper rate. However, this may still cost more for smokers. The difference could be up to four times than the premium rate of regular term life insurance. This is because smokers are more at risks of death than those that are non-smokers. However, if you shop around and compare rates from insurance providers, you may find a policy that is cheaper than the others. Depending on what you smoke and its frequency, you may even qualify for a non-smoker rate.
How to Purchase Term Life Insurance for Smokers
If you are a smoker and you would like to purchase term life insurance, first, determine the length of coverage that you prefer. If you are planning to quit on smoking, you may get a shorter coverage period so you can apply for a new non-smoker rate once it expires. You need to cease from smoking for at least a year to qualify for non-smoker rates. Your urine test should be negative from nicotine once you apply for a non-smoker term life insurance. If the result is positive, then you will be given a rate for smokers.
As mentioned, the rate for smokers is generally higher. But there are several insurance providers that offer this type of policy. Comparing their rates will help you get a lower premium than the rest. Request for free quotes to determine their rates so you can compare them from each other. Aside from smoking, there are other factors that will determine the rate of your policy including age and overall health condition. Younger clients with no other health concerns usually get lower rates than those that are older and with existing medical condition. The best way to lower your rate for your insurance is to quit smoking, take care of your health and apply while you are younger.