Whole Life vs Term Life Insurance.

If you are the main source of income in your family, then you need to insure your life. And you can choose term life, whole life or a combination of both.

	Term Life	Whole Life
Protection period	5, 10, or 20 years	Permanent, or whole life.
Premiums	Lower premiums. Premiums may increase with age.	Higher premiums because part of your premium is used to invest in savings. Premium is usually fixed and doesn’t increase with age.
Savings account	Not available.	Your savings known as “cash value” or “account value” is tax deferred. You can get this money back either by cashing in your policy or borrowing against it.

As a guide, if you need a policy that covers you for 10 years or less then go for term life. If you need long term cover then whole life is usually your best bet. If you need cover for somewhere between 10 and 20 years, then you will need an expert to analyze which one is financially better for you.

You should always ensure you and your spouse has all the coverage before considering taking insurance on your child. However, if your child is the main source of income (eg. child actor, singer, young tennis stars and so on) then your child becomes a priority when deciding who to insure first. The rule is always to insure the breadwinner or main source of income earner.

Never treat insurance as an investment tool for you to save. Insurance is a protection tool for you to transfer your risk to the insurer. It was never meant to be an investment tool.