Whole Life Versus Term Life InsurancePosted on Mar 26, 2020
Chances are that you’ve heard a lot about the importance of life insurance. No one really likes to discuss their own mortality or how their families will get by without them. Unfortunately, it may be one of the most important conversations you’ll have to make for the sake of your family.
Here’s what you need to know about whole life vs. term life insurance.
What Is Term Life Insurance?
Term life insurance is insurance protection you purchase for a specific amount of time — known as the term. It is the simplest and one of the most cost-effective insurance policies. It provides death benefits to the designated recipient if you die within the term of your policy.
While some might argue that whole life insurance is the better option for estate planning, term life may provide additional insurance protection for families when it is needed most.
For instance, couples with young children, aging parents, mortgages, college tuition, and each other to consider may take out a term life policy. Generally, the term runs until their home is paid for, children have graduated from college, and parents have passed away.
The coverage will make household expenses more manageable for the partner left behind. Therefore, term life insurance can be an essential tool for younger couples trying to make sure their family is covered in the aftermath of their death.
One thing to note about a term life policy is that it gets more expensive as you age. While the rate is guaranteed not to increase during your “term”, there are no such guarantees should you decide to extend your policy an additional term.
The great thing about term life insurance is that it is widely available. Working with an independent insurance agency, like Otterstedt Insurance Agency, can help you get more mileage from your life insurance investment.
With this type of policy, it is more about caring for the people you leave behind in their immediate futures rather than building cash value over a lifetime.
What Is Whole Life Insurance?
Whole life insurance is a bit different in nature and cost than term life insurance. Many would argue that whole life insurance protection is a form of estate planning that is impossible to ignore for families who have assets to protect. Where term life insurance is considered to be temporary protection, whole life insurance offers lifelong protection at a guaranteed price.
Additionally, whole life coverage allows your plan to accumulate cash value throughout the life of the policy.
Whole life policies also almost always require health examinations to obtain the policy. While it is possible to purchase without a health exam, it almost always costs more to do so.
Another benefit for whole life insurance is that you can borrow against the cash value during the life of the policy – offering you financial options that might not otherwise be available to you in moments of a financial crisis.
The younger you are when you begin your life insurance policy, the lower the monthly costs of the policy will be. However, term life policies are almost always more affordable, even though they only offer temporary financial protection.
For most families, term life is the wiser choice. However, if you have a child who will be a lifelong dependent, a sizeable, taxable estate, or would like to leave actual cash behind to your heirs, a whole life insurance policy may be the best answer for you.
Talk to Otterstedt Insurance Agency About Whole Life Versus Term Life Insurance
Otterstedt Insurance Agency is here to help you get the life insurance protection you need, whether it is whole life insurance or term life insurance.