TERM LIFE INSURANCE VS. WHOLE LIFE INSURANCE
Term life vs whole life insurance
The world of life insurance can be very confusing. And if you’re confused by the whole life vs term life debate, don’t worry – you’re not the only one. But here’s the good news: there are plenty of resources to help you learn more so that you’ll know the difference between term life and whole life insurancein no time
What’s the difference between term and whole life insurance?
Here’s the breakdown. Term life insurance will cover you for a specified period, whereas whole life insurance provides permanent lifetime coverage.But wait – you need more details! Here’s a basic summary of term life vs whole life:
Term life insurance
- Provides coverage at a fixed cost for a defined number of years.
- Your beneficiary receives a lump sum if you pass away during the term.
- Multiple term options – for example, 10, 20, 30, or 40 years.
- Offers the lowest initial price.
- Generally pays a death benefit only, meaning no interest.
Whole life insurance
- No expiry date regardless of how long you live, as long as you pay your premiums.
- Includes a cash value (think of savings account) you can build-up and ‘surrender’ in exchange for some of the money.
- Higher premiums than term life insurance, but with potential for savings if your cash value accumulates..
Whether you choose term life insurance or whole life insurance, here are some of the main things to think about:
- Your age
- Salary
- State of health
- Any debts
- Your retirement plans
- Your children’s age.
Should I get term or whole life insurance?
Weighing up the benefits ofwhole life vs term life insurance isn’t easy, but your own personal circumstances may help you decide. If you’re young and in good health, term life insurance is usually more affordable, though it’s worth remembering that your dependants will only be covered for the duration of your policy i.e 10, 20 , 30 or 40 years. In contrast, whole life insurance is often an attractive option for wealthy people who can afford the higher premiums and wish to leave behind an inheritance for their loved ones; the death benefits from a whole life insurance policy can be put towards any taxes owed on an estate .What’s more, whole life insurance isa good option for business owners who want financial protection in the event of a business partner’s death, as there is no medical underwriting required . However if medical exam is not an issue, term life insurance may be a better fit due to higher amounts of coverage for less than whole life.
Term life vs whole life insurance
So, which is better – term life or whole life insurance? In an ideal world, it would be fantastic to be covered for life, with an ever-growing pot of cash and financial security for your children. For those with the means, the benefits of whole life insurance are clear. However, term life insurance is affordable and accessible, so it’s the usually the best option for those on a budget or with temporary needs. Ultimately, this is a personal choice for each individual, and whichever product you select, the most important thing is that you and your loved ones are covered.