Term Life & Whole Life
Life insurance usually comes in two types:
Term life insurance policies are active for a particular term of your life, like 20 years, 30 years, etc. Term life is less complicated than whole life insurance and is more affordable because it doesn’t last forever.
Whole life insurance or permanent life insurance lasts your entire life. Because of that, it’s more expensive, and there are a lot more ins and outs to how it works. There are several different types of whole life insurance, and we’ll talk about those below.
- Most affordable
- Easier to understand
- Term length options
- Only pays upon death during the term
- Term may end when you need it most
- Lasts your whole life
- Cost remains the same
- You can access funds paid into the policy
- More expensive
Term life insurance is pretty straightforward. It pays if you die during the term of the policy. The most common term people choose is 30 years, but you can select 10 years, 20, or just about any other term. Term policies simply pay a sum of money to your designated beneficiaries if you die within the term of the policy.
Any time is a good time to consider term life insurance. Even if you’re younger and unmarried, you may want to leave something behind to parents, siblings, or other loved ones. The sooner you get it, the less you’ll pay.
Let’s say you have a home with a mortgage, and you want your spouse to be able to either pay off or continue to pay the mortgage if you should die. A term life policy is great for that. Term life policies are commonly purchased in dollar amounts like $100,000, $250,000, $500,000, or more. Those sums can allow a spouse or other loved one to continue paying or pay off a home mortgage after you’re gone.
Term life policies are relatively simple to get and understand and only require a little bit of information.
- Overall health condition
- Tobacco or nicotine use
- Some family medical history
Whole life insurance (also known as permanent life insurance) is just what it sounds like. It lasts your entire lifetime, and for that reason, whole life can be more complicated and typically more expensive. There are also a bunch of different sub-categories that fall under whole/permanent life insurance.
Unlike term life which only pays if you die, a whole life policy can give you access to the funds you’ve paid into the policy if you need the money later in life. Those funds also grow with interest over time.
You can even surrender a whole life policy and get back the funds you’ve paid in all at once. You will, of course, lose coverage at that point, but a whole life policy is flexible in ways term life is not.
Even more options fall under the category of whole life if you’d like your funds to be more flexible. We will be glad to walk you through all the options to find the life insurance that fits you best. Request a quote anytime!
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