We all face the common question while buying life insurance. What type of insurance is best for me- term life insurance, or whole life insurance?

While a lot of people may argue either way, it must be decided by putting things into context.

The position of the policyholder may warrant a whole life or a term life insurance policy.

For instance, if you live alone and earn for yourself, without a single dependent, a term life policy may suit you. Infact if you live with a spouse, who is capable of fending for themselves, then again, you will not need a whole life insurance policy.

However, if you have a spouse, or a child or any other dependent living with you in a house that is mortgaged, things change. In this case you will need a whole life insurance policy as opposed to a term life insurance policy. If you are the sole bread winner in your family, then insurers will tell you that you need to have a life insurance policy that is the equivalent of at least five or ten times the value of your current salary.

Term life insurance policy

A term life insurance policy has its share of problems. All of them seem hypothetical, but they are fairly possible as well. For instance, let us say that you are living with a spouse and later have children. If you have a term life insurance policy, it would be overly optimistic to assume that you will not need a life insurance policy. This is because, if you have a term life insurance policy, it will be for a period of 20 to 30 years. This means that by the second term of your term life policy, a case of possibilities can take place:

- Your spouse could turn dependent, owing to a disability, retardation, or a terminal disease that extends over a long period of years.

- Even if you have your spouse insured, you could have a child who is born with birth defects and would become a dependent on you.

- By the time your second term comes up for review, you would most probably be fifty to sixty years of age. This means the second term of the premiums will have to be paid off using what you made from the first. This is because you may be old and more susceptible to death.

Whole life insurance

Whole life insurance policies are good for those who have family to take care of.

There is no second term to them like in a term life policy. A whole life policy pays upon the death of the policyholder.

The value of the amount can be increased by the policy holder, at any point in his life, at no extra costs at all.

Although a whole life insurance policy is a whole lot expensive as compared to term life, it is not restricted to a certain number of years like a term life policy is.

Life insurance is designed to give people a sense of peace and provide for their dependents accordingly. So if you are choosing either of the two types of life insurance, make sure that you have considered every aspect of your future requirements.