One obvious option will be to purchase the Whole Life Insurance policy and the Term Insurance policy separately. But there could be more cost-effective alternatives.
Before we discuss on the options, let’s examine why someone will want both a Whole Life policy and a Term policy at once. Whole Life policies are catered towards setting aside a lump sum payment at the end of the insured’s life, whether timely or untimely. The payout is generally anticipated towards the distant future unless of course in the event of an untimely demise.
But at the same time, there may be a need for additional coverage during the early years of the Whole Life policy, especially when the beneficiary in completely dependent on the insured. In the case of a young child, fully dependent on his parent. In the event of an untimely death of the insured, while the Whole Life policy will offer a lump sum payment to the dependent, it may not be sufficient to last the child since he is not able to support himself yet. Thus, a Term Insurance policy will be able to supplement the payout given to the beneficiary at a much reduced cost compared to the same coverage under the Whole Life Insurance policy.
Why supplement with a Term policy? As mentioned already, the first reason is cost-effectiveness. The second reason is the fact that the child will likely be able to support himself towards the later years of the Whole Life policy and even if an untimely death of the insured occurs then, the payout would be sufficient since the child is self-supporting already. Compared to the early years, less coverage is generally anticipated for the later years. Since Term insurance offers very affordable protection for a fixed period of time, it is a very good option when one is considering such a scenario.
So coming back to the question, is there a better option than purchasing two separate plans? Yes, there is, and the answer would be to purchase a Term Insurance as a rider upon the Whole Life policy. Generally, purchasing a Term Insurance rider would be cheaper than purchasing a Term Insurance policy as a standalone policy. Thus, you stand to save a little on premiums, while still achieving the protection that you need.