Why would you buy term life insurance ?
"Buy term and invest the difference."
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You may have heard of this phrase being tossed about in the insurance industry, particularly when discussing about "term insurance".
But what does it mean?
To understand that, we have a backtrack a little and talk about term insurance, and how it differs from the regular "whole life" insurance.
Putting it very simply, term insurance is a kind of insurance policy that provides you with pure insurance coverage for a certain period of time. Unlike whole life insurance, you will not get any money back once the policy matures at the end of the insured period.
Because of this, for the same amount of insurance ( remortgages ) coverage, you'll find that the premiums for a term insurance policy is a lot lower than that of the corresponding whole life policy.
And this is where the phrase "buy term and invest the difference" comes in. In essence, it refers to the strategy of buying term insurance, and using the money you ( secured loans ) save from the lower premiums to invest yourself in another investment vehicle to derive potentially higher returns compared to the regular whole life policy.