Indeed, there’s a difference between whole life and term insurance, but what is it ? And why? Because one is good for some situations where the other one isn’t, as well as the opposite. Arming yourself with the right information can lead to a happy life with your peace of mind intact.
What is Term Insurance?
Term is one of the most inexpensive types of life insurance policies that you can choose. It is commonly used in case you die in a specific amount of time (usually ten, fifteen or twenty years).
So if you have a higher than average risk job, or like to travel a lot, then it might be best to get term life insurance. Term life insurance does have an expiration date on it, hence the name “term”, and once it does expiry, you will either need to renew (generally at a higher rate) or select a different policy. It is not the kind of policy you would get if you think you will die of natural causes.
What is Whole Life Insurance?
This is the type of policy which lasts your entire life, and is paid upon your death.
Whole life consists of 2 parts; a death benefit and an investment benefit.
So why are there two types, and how do they differ?
The death benefit will always be paid out; however the investment part is essentially money storage, that gains interest. You pay somewhat more than the actual cost of the insurance policy, and the extra is put into an account, and you can actually withdraw money. Plus, you can obtain a loan against the investment. Or, just don’t touch it, and leave your beneficiaries additional money at your passing.
In Summary, the Difference Between Term and Whole Life
As you can see, the differences between term insurance and whole life are fairly straightforward.
With term, you are covered for a fixed length of time, and is frequently used if you have a high risk job or high risk pasttimes. If this sounds like your lifestyle, then possibly term life insurance is the right option for you then.
Then again, if you anticipate living to an old age, then whole life is a better choice in your situation.
One more thing to think about, there isn’t anything preventing you from getting both. If you have both, you are better secured than if you only had a single kind. Plus the pay out is much better with two life insurance policies than just one.
So maybe even think of purchasing both term and whole life; this may even give you a better peace of mind knowing you are really looking after your family even after you are gone.
Do You Have Enough Coverage? FREE Information!
If you pass away, who will take care of your family? Will they still have food on the table? Take a look at more free information about term and whole life insurance, and consider accident insurance, too (it’s really inexpensive).
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