Should You Stay With Term Life Insurance or Consider Whole Life Insurance?

Term life insurance is the most popular choice for life insurance. This is primarily due to its affordability. Term life insurance is often seen as the cheaper alternative for life insurance. It is also beneficial in the sense that you can take out a policy for a specific period of time. If you are in the latter years of life or only need insurance a few years before you apply for a different type of policy (if you’re trying to quit smoking, drinking, or are losing weight), you can do so. The premiums are less, and are cheaper. Sometimes, there is a simple question however – Is it better to go with term life insurance or whole life insurance?

Differences between Term Life Insurance and Whole Life Insurance

The difference between the two is simple and straightforward. A whole life policy covers someone over his or her entire life. A term life insurance policy covers the insured if they pass away during that time period. A whole life policy accrues cash value (that may be used to take out loans), whereas a term life insurance policy does not. Term life coverage can help cover an individual for a time period, usually up to 30 years. There are numerous types of whole life insurance policies that your agent can cover with you.

Cost

One major issue with whole life insurance situation is that it can be expensive. Because you’re paying for the cash value accruement as well, it is more expensive than term life insurance. This is one of the first things to consider. If you would like the cash value, and can afford it, this may be the best choice for you. If, however, you cannot fit the whole life premium into your budget, or see no need for the cash accruement, you may want to consider term life insurance. The higher premium that comes with choosing a whole life insurance could be better suited by putting more into a retirement fund than putting it into a life insurance account. Age can be a major issue also. If you are well over 60, companies may not sell you a term policy, and you may be forced into a whole life policy.

Because whole life insurance coverage can be expensive, it seems to come as a perfect fit for those who are wealthier. The extra cash value accrued by going through whole life coverage can help cover the exhaustive list of expenses that their spouse or loved one may have to pick up afterward. This comes more into planning when considering estate planning, as this can go directly to helping with those. This is another reason why these premiums are more expensive, however. For whole life coverage to be worth it, you need to pay in for numerous years. This usually means over 20 years. If you cannot afford these high premium costs for that long period of time, whole life coverage may not be for you.

Benefits of Term Life Insurance

Term life insurance is generally for those who may not have large needs in terms of life insurance, as well as those who will be unable to afford the high rates that come with a whole life policy. Term life insurance is not bad, or useless, just because it is at a lower cost. It is that way for a reason. Term life insurance can be effective and can help families who may not be able to afford large, whole term policies but need to insure with life insurance. It is difficult to tell someone what he or she should choose. You must look at your own situation and figure out what policy best fits your needs. Any licensed insurance agent should be able to help you understand the difference between both types of insurance and guide you in the right direction.