When you check out articles about life insurance policies, you will notice the debate about whole life insurance policies and term life insurance policies.

Many people will tell you to save money. They say that since term life insurance policies offer the same coverage as whole life insurance policies, why should you spend a few times more in premium for whole life insurance policies.

You may wonder what is the difference between the two types of insurance policies.

Whole life insurance policies last a life time. They have a cash value. That means you can treat the insurance policies as your saving plans.

Let us suppose that you pay the premium faithfully for ten years, and you lose your job in the eleventh year. You can choose to stop paying the premium.

By this time, the whole life insurance policy has enough cash value to keep the policy in force. Once you start working again, you can continue to pay the premium.

That is the best thing about whole life insurance policies. The cash value ensures that you are covered even when you do not have the money to pay for the insurance plan for a year or two.

What about term life insurance policies?

Term life insurance policies insure you for a fixed term. If you buy term life insurance policies for a coverage of ten years, you need to pay premium for the ten years.

Once the ten years is up, the policy ends. You no longer have the protection of the insurance.

Term life insurance policies are much cheaper than whole life insurance policies. They usually do not have cash value.

You must pay the premium faithfully throughout the term.

Once you stop paying the premium, the policy lapses. If you need another insurance policy, you have to sign up for a new one at a much higher price.

Some people like the low premium and high sum assured. They want to keep the money for their own investment purposes.

Looking at the premium, you may think of buying term life insurance policies. However, once you have considered the following factors, you will agree that buying whole life insurance policies is better.

1. Term life coverage is too short

You are likely to live for a very long time. If you buy term life insurance policy, the policy will definitely lapse before you die.

Some people may say that you do not need insurance coverage when you are old.

They forget that money is still important when you are old. You need money even when you are dead. After all, funeral cost and other related expenses are not cheap.

The best part about life policies is the riders attached to the policies. If your policy lapses or ends, the riders end too.

2. Cash value

The cash value increases when the whole life insurance policies aged.

That means the cash value of the policy balloons to a large sum of money by the time you retire and grow old.

You can borrow the money in the form of policy loan. In this case, you have an extra source of money when you are old and unemployed.

You can treat the whole life insurance policies as your retirement nests.

After all, most of us cannot save enough money or have the ability to invest the money on our own.

You might as well use the whole life insurance policies as your savings for retirement.

3. Riders

Many people buy riders with whole life insurance policies. When you are not working, you can use the cash value to keep the riders in force too.

That is why it is important to buy whole life insurance policies. The time when you are unemployed is the time you need insurance coverage most. You cannot afford to let any policy lapse, and let yourself unprotected by insurance.

Even if you are quite rich, a major accident or a major illness can wipe out a big chunk of your savings.

4. Insurance companies

If you worry that the insurance companies close down, you can rest assured that the value of the whole life insurance policies is not affected.

Many countries have laws to protect the policyholders.

They have laws to keep the whole life insurance policies in force, and to let other insurance companies take over the administration.

5. Premium is low if you are young

The best time to buy whole life insurance policies is when you are young.

That is the time when you do not need insurance coverage, that is why the premium is low.

The best part is that you pay the same premium year after year. The premium does not increase, yet the cash value and the sum assured increase.

Whole life insurance policies are participating policies. That means the insurance companies invest your money and you get a share of the profits.

Once the profits are declared, it becomes a guaranteed amount. The value will not decrease.

That is definitely better than you invest on your own, and lose money as a result.

That is why buying whole life insurance policies is a wise decision. Even if you have limited cash to spare, you can buy one policy for a low premium.

When you are older and have more money, you can buy another policy to increase your coverage.