If you are shopping for life insurance, you may find it hard to decide what type of insurance is right for your needs. Term vs whole life insurance is usually the biggest decision you’ll have to make. The right insurance for you will depend on your personal and familial needs. Once you understand the key differences between term and whole life insurance, you’ll be able to choose the best plan.
Term life insurance is purchased for a certain amount of years or terms. The most common lengths of terms are 10, 20 or 30 years. Term life insurance is very affordable and is one of the most common types of insurance that people choose to purchase. Term life insurance does not normally build a cash value. It will pay benefits to the beneficiary upon your death. Often, you’ll be able to renew your policy when the term ends but be prepared for the rates to be higher the older you get. The rates can also be increased due to illness.
Whole life insurance is meant to cover you for your entire lifetime. Whole life insurance is more expensive because the premiums are usually locked in for life. Also, whole life insurance builds a cash value over time that you can use to take out loans against. If you choose to take out a loan, that money will be removed from the total amount of benefits paid upon death.
As you can see, the decision to purchase term or whole life insurance is very personal. If you are still confused about your options, talk to a qualified insurance broker for more information.