Life insurance refers to the payment of an amount after a pre-determined period or after the demise of the person who has been insured. There are two kinds of life insurance used, they are term insurance and whole or universal insurance. Life insurance helps the insured to make sure that the family members or other dependents can maintain their standard of living even after the death of the insured. Most people are confused about what kind of insurance would suit their needs. We have summarized both types below:

Term insurance is taken for a fixed period of 10 or 20 years. It can also be set until the age of 100 but generally, 10 to 20-year periods are preferred. These are affordable and people with average incomes looking for a hefty payment at the time of expiry, prefer it the most. These are $35- $50 plans and are easy to maintain by individuals whose income isn’t that large. Term life insurance is preferred by 90% of the citizens of Canada. The insured person must forego or renew the insurance plan if it is not used on or before the term ends.

Whole or universal life insurance insures a person for life. This is an expensive insurance and can be for $200 per year also. This life insurance allows the insured to make use of other assets without worrying about the financial stability of their dependents. Whole life insurance is less preferred, and many tend to think it is a rip-off as most sites and advisors believe that it is sold by life insurance companies for higher commission rates. This type of life insurance is usually preferred by people looking to insure their estates which have higher tax rates.

Comparatively speaking, term insurance seems like a better and more affordable option for people with not so generous incomes looking for a good life insurance. But, it all comes down to the need, want and budget of the person buying the life insurance. If you are still on the edge, there are life insurance companies which offer a combination of both. Term insurance can be converted to permanent and you can receive double benefits.