Term Life? Whole Life? What’s
The Big Deal?
The “big deal” is that there are some major differences
between the two types of life insurance policies. Put very
basically, term life pays out the face value of the policy
while whole life allows your premiums to become an investment
of sorts. So which one is best? Both have some advantages
and deciding which to buy becomes a personal question. Here’s
the information you need to make that decision.
Term Life Insurance
If you choose term life insurance, you select an amount to
be paid upon your death. Term life insurance amounts vary
greatly and you’ll find that you can be insured for
as little as a few thousand dollars or as much as millions
as long as you have the money to pay the premiums. The premiums
for term life insurance may increase over the life of the
policy but the payout value will remain constant unless you
choose to change it. If you’re considering term life,
talk to an agent about long-term costs. As a rule, this policy
is used to pay out benefits to family members upon your death.
It can be used to pay off bills, handle funeral expenses and
leave loved ones financially secure.
Whole Life Insurance
By contrast, whole life insurance policies are often referred
to as an investment. There are some who believe them to be
safe but others say the risks aren’t worth the cost.
Generally, premiums for whole life policies are more expensive
than term life policies. Why? Because you are not only paying
for life insurance, you are actually saving money in an account.
And if the time comes that you need that money – even
before you die – you have the option of taking out a
loan against the value. Remember that would mean that the
benefits paid out upon your death would be decreased by that
amount, but it can be a good savings option.
So Which Is The Answer?
That’s entirely up to you and your lifestyle, but don’t
decide just yet. Life insurance specialists will tell you
that there are some other options as well and even some ways
to create a package plan specifically suited to your needs.
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