You probably already know that life insurance provides financial security for your loved ones after passing. However, you may wonder whether term or whole life insurance is more appropriate for your needs. If you’re trying to decide between term insurance and life insurance, this brief comparison should help:
Whole Life Insurance
If you’re looking for a permanent life insurance policy, whole life is the most straightforward option because it may provide coverage for as long as you make your premium payments. The cash value feature is an added benefit of whole life insurance.
You may expect your premium payments to grow in this account over time. Once you have enough cash value, you may borrow against the bill or turn in the policy for cash.
Whole life insurance is easier to understand than other types of life insurance. The cash value account increases at a set rate while the premiums remain the same for the rest of your life. It is also guaranteed that the death benefit will be paid unless a large loan is taken out against the cash value.
If you take out a loan against your life insurance policy, you don’t have to pay it back, but the amount of the loan will be taken out of the death benefit.
Term Life Insurance
As the name implies, term life insurance covers a specific period, typically between 10-30 years. This coverage has no cash value accumulation compared to whole life insurance. Your beneficiaries will receive a payout if you pass away during the period.
Your term life insurance coverage should be as long as it will take you to pay off the premiums. For example, a new parent could get an insurance policy that lasts for 20 years to protect their finances until their child no longer needs support.
Choosing Between Whole And Term Life Insurance
Now, the question is how to decide what kind of protection you need. For most people, term life insurance is sufficient, but there are situations where having permanent coverage would be helpful. Choosing whole life insurance would be the best option if you:
- Can pay higher premiums.
- Plan to leave money for the next generation.
- Are looking for cash-value life insurance with guaranteed growth
However, go with the term life if you:
- Want the cheapest premiums.
- Need life insurance protection for a limited time only.
- Not interested in using life insurance as a way to invest.
Conclusion
So, what kind of insurance is best? With its cash value feature, whole life insurance gives you more financial freedom. However, many policyholders don’t want to avoid dealing with the hassle and higher cost of permanent insurance, so they buy term insurance instead and invest the rest.
At Lapeira & Associates LLC, we aim to give you insurance policies that cover everything you need and make your life easier. We’re here to assist you in finding the right policy for your needs. Contact our company at (855) 963-6900 for more details about our services. If you’re interested in a free quote, CLICK HERE now. Topics and coverage discussed in this article are not guaranteed, consult with your agents to determine what your policy does and does not cover. We are more than happy to help!
