Whole Life Insurance vs. Term Life Insurance: What You Need to Know
29 Nov 2019
There are two main types of life insurance–term and whole. But which is best? Here’s what you need to know about while life insurance vs term life insurance.
Over 40% of Americans don’t have any type of life insurance. This is a huge mistake.
Having a life insurance policy should be an essential part of your estate planning. Thinking about your mortality can be unpleasant, but it’s the only way to ensure that your loved ones are taken care of should the worst happen.
To get started, there are different types of life insurance available. Keep reading to learn about the difference between whole life insurance vs. term insurance.
What Is Term Life Insurance?
This type of life insurance will provide you coverage for a pre-agreed upon period of time. The policy has no other value than to pay out to your beneficiaries upon your passing.
When you sign up for your policy, you’ll need to choose how long you’ll want the coverage for. Typical lengths are 10, 20, or 30 years.
You should buy enough coverage that your income and support for your family will be replaced.
What Is Whole Life Insurance?
This type of insurance provides coverage for the rest of your life. It also includes an investment element. This additional element to your insurance means a cash value grows.
The longer you have your policy, the more the cash value grows. This additional growth value is tax-deferred. You won’t have to pay taxes on this growth while it’s accumulating.
You can borrow against the accumulated cash value. You’ll need to repay the loan plus interest, or it’ll reduce the value of the death benefit.
These policies are relatively straightforward, with your premium remaining the same for as long as you live. Your benefits are also guaranteed.
Whole Life Insurance vs. Term
When deciding between whole life and term insurance, you need to consider your needs. Many people choose to buy term life insurance to cover them while they raise their children. They try to time the expiration of their life insurance around the time that their children become grown and self-sufficient.
Whole life insurance is suitable for people who have a less than stable estate. This type of life insurance can provide cash for taxes and bills owed. It’s also a good idea for those who want to spend their retirement money and still be able to leave something for their heirs.
If you’re unsure of what type of life insurance you need, it’s best to speak with the professionals. They can help evaluate your financial situation and guide you towards the right solution.
Choose the Right Insurance for You
When it comes to comparing whole life insurance vs. term life insurance, you need to think about your budget and what your end goal is. If you need something affordable and for a set number of years, then term insurance is the better option.
If you’re looking for long term benefits that allow you to build value, then a whole life insurance policy would work well.
Contact our team today and let us help you obtain life insurance.