The Difference Between Term and Whole Life Insurance
No life plan is complete without life insurance. When you go to choose one, which do you pick? Term or whole life insurance? Knowing the ins and outs of each will help you make the most assertive decision.
Term vs Whole: Which Life Insurance is Right For You?
Although, some might not consider it a necessity, the truth is it is. Everyone needs life insurance, especially after adult life starts and responsibilities start to add up, like supporting your family, paying off debts, etc. When you think of getting life insurance, do you know what your options are?
These two are the main types of life insurance. Understand the difference before you make a decision:
Term Life Insurance
The beauty of term life insurance is that it gives you coverage for a set amount of time, which makes it a good place to start, if you’ve never had life insurance before. Some of the pros of term life insurance is that it tends to be significantly less expensive than whole life insurance and that you get to choose the term when you buy the policy, which most commonly go from 10 to 20 or 30 years, depending on your needs. Additionally, you should keep in mind that term life insurance does not accumulate cash value, so once the policy expires, your life insurer’s obligation to you ends. Term life insurance can be considered a cost-effective way to fulfil your life insurance needs in a temporary manner.
Whole Life Insurance
With a name this self explanatory, you might imagine what this policy is all about. Whole life insurance is meant to protect you your whole life. The tricky thing about whole term life insurance is that its premiums are considerably higher, yet it is still beneficial as it accumulates cash value over time. This is the most recommended type on insurance to include in retirement planning. Another positive thing about whole life insurance is that you can borrow money from your account, but if you fail to repay with interest, your death benefit will be reduced. This type of life insurance is the most straightforward type of permanent life insurance.
So, if you’re looking for affordable coverage, or if you want coverage only for a certain amount of time, term life insurance might be exactly what you need, but if you want a more permanent option, that offers other benefits, whole life insurance could be what you’re looking for. Don’t make a decision without being sure. Contact one of our independent insurance agents at AAI Central Agency, to learn more about the difference between each life insurance policy before you make your decision.