Know the difference between these two life insurance policies.
Term and whole life insurance are both viable sources of coverage, but one of them is probably better for you. Also keep in mind that you are a changing person and that your needs change as you grow. What may have been best for you five years ago may not be now. Here is a guide for you to compare and contrast the differences between term and whole life insurance.
Term Life Insurance
This kind of life insurance is designed to cover you through a specific amount of time when they can’t afford to pay whole life insurance. There is no cash value, but there is a guaranteed death benefit. The premiums will increase at certain times such as after a year, 5 years, 10 years, etc.
Many people choose this kind of life insurance during the time when their family is growing and as a way to have something in place of permanent insurance during years where financial responsibilities are higher than income.
Whole Life Insurance
As opposed to term life insurance, whole life insurance is made to give insurance coverage plus “living benefits” which includes cash value accumulations—as long as the insurance premiums is being paid on time. The insurance remains valid regardless of health.
In the long run, whole life insurance is better because it covers you for your whole life (hence the name). Once approved, the coverage cannot be taken away as long as premiums are paid. Even if your health is declining, the insurance will remain in place.
Also, this type of insurance builds cash value, as long as premiums are paid on time. You can use this cash value in the future for any purpose through a policy loan. You can use it to put a down payment on a home, pay for your children’s education, or for retirement!