When choosing either term or whole life insurance you may be wondering which one is best for you. That is a question that most people ask and although we can’t answer it for you, we can give the benefits and disadvantages of both so that you have the knowledge to make the right choice.
Term life insurance provides your basic coverage against the loss of life and tends to be less expensive which is why most people immediately opt for the term life insurance. Whole life insurance is a bit more expensive but it has an investment component as well as your basic life insurance needs.
There are specific components you need to look at while decided which one to go with:
The length of coverage – You can purchase a term policy for a set period of time, usually up to 20 years. Whole life is permanent insurance that you keep for your entire life without any changes to the policy or price.
Cost – Term life premiums are less expensive and you can set a determined the premium schedule. This can be quarterly, monthly, or annually. Whole life premiums can also be scheduled but are mostcostly because the payment is invested and the value of the policy grows over your lifetime. This makes it a strong investment choice if you are young enough to start doing it early. Equity – As stated if you purchase term life insurance you only “win” if you die so to speak. Other than that you are just giving money away. With whole life insurance you can get back most, if not more than what you put into it if you live which is the better way to “win” at the insurance game. You can either cash the policy inat the end of its term or borrowing against it, so that you always have something to fall back on. Time challenges – If you wait a very long time to get life insurance or if you have a chronic illness and you will be paying a very high premium it is best to go with term life insurance. If you start early and know that you will need a policy longer than 20 years it is much better for you to choose whole life insurance becausechances are you will outlive your policy.
Although it is great equity, whole life insurance should never be purchased solely as an investment. It should also not be purchased on your children as a way to save for college. Make sure that before you buy any for your children at all that you have enough to cover you and your spouse.
As a buyer one can always take a look at tools offered by several companies such as mortgage life insurance calculator for a better understanding of what they offer in return.
This is an important decision that needs to be made because everyone, no matter what their status in life is should have life insurance on themselves at least to cover any medical and death expenses so that your family does not have to be responsible for it.