Deciding between term life and whole life insurance can be a difficult decision, but it depends on your financial situation and goals. Here are some of the most notable differences between the two types of insurance to help you decide which coverage is best for you.
Term Life Insurance Explained
Term life insurance provides coverage for a set amount of time. These terms last for 10 to 30 years. Suppose you die during the term of your policy. In that case, your beneficiaries will receive a death benefit — a sum of money from your insurance policy. Term life insurance can be anywhere from $50,000 to $300,000 or more.
Term life is generally less expensive than whole life insurance, but it does not provide cash value or other financial benefits while you are alive.
Whole Life Insurance Explained
Whole life insurance, a type of permanent life insurance, provides coverage for your entire life and may build cash value over time. This type of policy is more expensive than term life insurance, but it can provide financial benefits in addition to the death benefit.
For example, you may borrow against your policy’s cash value or use it to pay premiums. This cash value grows over time for you to use however you like. Whole life insurance is also permanent, so you will never have to renew or give up your policy as long as you keep up with your premiums.
Deciding Which Option Works Best For You
Which type of insurance is right for you? Here are some factors to consider:
- How long do you need coverage for? If you only need coverage for a specific period of time, such as until your children are grown or until you pay off your mortgage, term life insurance may be the better choice.
- What is your budget for premiums? Term life insurance is typically more affordable than whole life insurance, so it may be a better option if you are on a tight budget. However, remember that the premiums for term life insurance may increase as you get older, especially when you have to renew your policy, while the premiums for whole life insurance remain the same.
- Do you want a policy with a savings component? Suppose you are looking for a policy that provides both financial protection and a savings component. In that case, whole life insurance may be the better choice.
Make Big Decisions with the Right Support
Your decision between term and whole life insurance comes down to your finances and goals. It may be helpful to speak with an expert to determine which type of insurance is best for you.
When you need support, we’re here for you. Jones Insurance Group works for you. To ask questions and learn more, call us at (864) 660-3535.