If we’ve learned anything in 2020, it’s that life can change very quickly.
The stable job you’ve relied on for years could be gone. You or your beloved spouse could become sick or get into an accident. Things you thought would never happen to you could actually happen, at a time you least expect it.
Let’s face it: There are very few things in life we have full control over. This is why it’s so important to have a life insurance policy to protect your family — just in case the unexpected happens.
You’ve probably heard about term life insurance and whole life insurance, but you might not understand the difference. Don’t worry. In this post, we’ll guide you through term life insurance ve whole life insurance to help you make an informed decision.
What Is Term Life Insurance?
Term life insurance is the easiest plan to understand (and the most affordable option to buy). You purchase your plan for a set “term,” usually between 10 and 30 years. After that, the plan expires.
In the unfortunate event of your death, the policy pays a death benefit to your named beneficiary. This is usually your surviving family members. Your beneficiaries receive a lump-sum payment that is tax-exempt.
Term life insurance plans become more expensive as you get older, especially past the age of 50. If you want coverage after your term ends, you’ll need to buy a new policy or convert it over to whole life insurance.
What Is Whole Life Insurance?
Unlike term life insurance, whole life insurance (also called permanent life insurance) covers you for life. In addition to death benefits, it also accrues a cash value over time.
At first, the premium for your policy will be higher than the cost of the insurance itself. This reverses as you get older, with the cost becoming less than others your age typically pay for a term policy.
Whole life insurance provides added security for your family. It also gives you a source to draw funds from to cover existing financial needs. Of course, these added benefits means you’ll pay a lot more for permanent life insurance premiums — often five to fifteen times more than term policies.
What’s the Right Life Insurance Policy for Me?
If your financial situation allows you to consider both options, how can you decide whether term life insurance vs whole is best for you?
Here are some factors you’ll want to consider:
- Health status
- Current age
- Your children’s ages
- Current savings
- Current debts
- Mortgage status
- College tuition for your children
- Retirement plan
- Plans for funeral and death expenses
- Estate planning
As you can see, there’s no cut-and-dry answer for which policy is best. You’ll want to speak with your insurance agent to discuss your financial needs and goals.
Term Life Insurance vs Whole: Which Will You Choose?
When it comes to term life insurance vs whole life insurance, the best policy for you depends on your family and financial circumstances.
It’s a big decision to make, but the good news is you don’t have to make it alone. Our full-service brokerage agency takes a personalized approach to insurance, helping you choose the perfect plan for your needs.
Give us a call at 210-469-3900 or use our online contact form to get in touch. We’re happy to answer any questions you may have.