Whole Life and Term Life Compared

Life insurance can be divided a few major types: whole life and permanent life, and then whole life and term life. Both have advantages and disadvantages, so it is important to compare policies using free quotes of rates from life insurance agents. Life insurance is essential for anyone who is the head of a household or cares for minor children and non-working spouses. The money paid out from a life insurance policy goes a long way toward covering bills, funeral expenses, college, and house payments. Even if you do not have beneficiaries, you may want to have a life insurance policy to provide money to charities or other family members.

Term Life Insurance Explained

Term life insurance is very popular. It is a type of policy that employers usually offer to their employees. Term life insurance has a definite ending point. You can choose to have insurance for 10, 20 or 50 years. At the end of the term, you have to decide whether to renew it or just let it expire. In order to renew it, you will have to re-qualify for the plan or qualify for a different kind of life insurance policy. A senior person may have more trouble renewing a term policy than someone who is young and healthy. However, it depends on each insurance company.

Premiums are usually lower with a term life insurance policy. You are only paying for the death benefit, and not the cash value associated with a whole life insurance policy. Term policies are acceptable for many people on a limited budget who want to ensure their families get a death payout. Some term insurance policies even offer the option to convert the policy to a permanent life insurance policy when the term ends. This will cost extra. Once a term policy expires, however, there is no cash value. You will not get any of your money back. This is why some people prefer a whole life insurance policy, which accumulates value over time.

Whole Life Insurance Explained

Whole life insurance is much different from term insurance. It is generally more secure, although it costs more. Whole insurance is considered permanent life insurance that covers an individual for a lifetime. It is never ending, which means you never have to pay renewal fees. In fact, you actually build value! When you pay your premiums, some of the money goes toward the cash value of the policy. Little by little, every year your cash value goes up. You can choose to participate in dividend-sharing/profit-sharing with the company or not. Either way, your cash value will grow and you can use it for anything. Many people start with a cheaper term life insurance policy and later switch to a whole life policy as they reach their senior years. This way, there is no lapse in coverage in case anything should happen.

Life insurance is a personal matter between you, your family, and your life insurance agent. An agent is an invaluable team member. Part advisor, part confidante, the agent is someone you can count on to answer your questions about life insurance. He can help you decide whether to choose a term life or whole life policy. You can even get free quotes for policy rates from any agent on this website. They are licensed professionals who have a lot of experience working with families. Ultimately, it is up to you to decide to purchase life insurance. Remember that you can usually start with a term policy and switch to permanent life insurance later on. On the other hand, you can start accumulating your cash value now and watch it grow for many years.