About 54 percent of all Americans have some form of life insurance coverage. Are you looking to get coverage to protect your family?
Buying life insurance can be confusing. There are different types of policies, and finding which one is best for you and your family situation should not be difficult.
Wondering about the differences between term life insurance vs. whole life insurance? We’ve got you covered. Keep reading to learn the difference, so you can select the best life insurance for you and your family.
What Is Term Life Insurance?
Term life insurance is simple—it covers you for a fixed amount of time like 15 or 20 years. It pays out if you die during this term.
If you outlive the term of the policy, your coverage ends and your family will not receive any money. For most policies, the amount of the death benefit stays the same throughout the term.
When deciding on your policy, you want to make sure the term life policy covers your financial obligation. For example, if you have a child, you can choose a 20-year policy to cover your child until your child is an adult.
You can purchase term life insurance policies from several insurance companies. Ask your insurance agent for a term life insurance guide to make sure you cover your financial needs. You should also get a couple of quotes to compare policies.
What Is Whole Life Insurance?
Whole life is a permanent type of life insurance. It offers you lifelong coverage and pays when you die.
There is also an investment component called the cash value. A portion of your paid premiums grows over time. When you have enough cash value, you can either surrender the policy for cash or even borrow against your account.
Whole life insurance can be more complicated. However, this form of permanent life insurance is more straightforward as your premiums remain the same throughout the policy. The death benefit is also guaranteed as long as you pay your premium, and your cash value grows.
You can always check out other finance and investment opportunity options with whole life insurance like Paradigm Life infinite banking.
What to Consider When Purchasing Term Life Insurance vs. Whole Life Insurance Policy?
The main difference between the two policies is the amount of coverage time. The whole life provides lifelong coverage, while the term policy is only for a specified amount of time.
Every person’s situation is unique, and determining which policy is right for you depends on your specific situation. You need to determine what matters most to you and consider the following:
- Your age
- Your health
- Your family’s financial needs
- Ages of your children
- Funeral expenses
- Plans for retirement
- Amount of debts including mortgage
- College plans for children
- Health expenses
- Other life insurance policies such as ones through your employer
There is a large cost difference between the two, so you need to consider all the benefits of each policy to see if it makes sense over the course of your life. If you want to ensure your children get life insurance money, you may want to look at your whole life policy as an investment.
Find the Right Coverage for You
Life insurance is more than just an insurance policy. It protects your family’s financial well-being if something should happen. It’s best to sit down and talk about your finances and determine what you need your life insurance policy to cover. This will help you decide between a term life insurance vs. whole life insurance policy.
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