While whole life insurance is considered the more valuable and of the two, it offers more than a lifetime of protection for a single premium. Term life insurance, however, simply has the insurance company will pay a large sum of money to the beneficiary—if the insured dies.
Whole life insurance can be a good option for some people, but term life insurance is less expensive and pays a fixed amount for a set period of time. Review these tips and insights to learn which policy is right for you.
What is Whole Life Insurance?
With whole life insurance, the premiums will never decrease, but they also allow you to “overpay”, thus increasing the overall value of the policy. The cash that’s built up in the policy can be withdrawn (with penalties) or used as the basis for a loan taken against the policy.
In other words, whole life insurance is a financial asset—NOT just a life insurance policy that may or may not result in a claim. Yes, you’ll pay more money in premiums, but you have far more flexibility, too.
What is Term Life Insurance?
Term life insurance has a fixed term, after which the policy simply expires. The premium is usually lower than that of a whole life insurance policy, but you have fewer options.
The term of the policy is generally five years or less, but can be as long as 30 years. Term life may not pay a death benefit as It may expire before the owner passes. This is why many people own several term life policies that expire at different times, allowing the owner to “layer” their coverage over a span of many years.
Pros and Cons of Life Insurance Coverage
When comparing term life and whole life coverage, remember that there are ups and downs to both.
Term life insurance is:
- Cheaper and more convenient for most people.
- Easy to get.
- Affordable and understandable protection for your family.
- But, it expires, meaning your premiums are lost to the wind.
Whole life insurance, on the other hand:
- Is more expensive.
- Can help you build a big nest egg.
- Could last your family for generations.
Whole life insurance is a great way to protect your family for the long term, something that you may not even file a claim against. Why? Because, the policy has so much value that you can continue to use it as an investment.
At the same time, term life is affordable, gives you peace of mind, and is easy to buy over and over, especially if there’s no required medical exam.
Contact The Budde Agency for Additional Details on Life Insurance Coverage
Looking at whole or term life insurance is a good investment for your family, but you need the specifics if you want to make the right choice for your here and now. Reach out to us at The Budde Agency for additional details that will help you protect your family and provide them with the financial security they deserve.