When shopping for life insurance, you’re bound to come across two different policies, whole life insurance and term life insurance. Each has the same goal: to provide financial security to your beneficiaries after your death.
If your spouse and your children are named beneficiaries in your life insurance policy, upon your passing they can expect to receive a payment from the insurance company. This can help cover your funeral expenses, make up for your lost income, and provide money they will need for living expenses, educational costs, debts, and other financial expenses that arise in the years and even decades to come.
Which policy is best for you and your family? At Quality 1st Insurance, we want to help you understand the difference between these two policies so you can make an informed and confident decision when investing in a life insurance policy.
Term Life Insurance
Term life insurance is usually less expensive than whole life insurance. Primary uses include death benefit income protection and income replacement. Premiums for this type of policy can vary, and the policy does not build cash value over time. Perhaps the biggest difference between term life insurance and whole life insurance is that term provides coverage for a set period of time, which can be anywhere from 10 to 40 years. Once the term has expired, the coverage expires, too.
Whole Life Insurance
Unlike term life insurance, whole life insurance does not “expire” after a set period of time. As long as you continue to pay the premiums (which are typically fixed), your beneficiaries will continue to receive permanent lifetime protection from the insurer. While more expensive than a term life insurance policy, whole life insurance not only offers death benefit income protection but also tax-deferred asset accumulation and tax-advantaged wealth preservation. In addition, it does build cash value over time, and beneficiaries can borrow against this in the form of a loan if needed.
Now that you know the main differences between the two, you can begin to consider which life policy might be best for you and then make a plan to talk to your insurance expert. Call Quality 1st today, and we will answer any questions you have, or we can provide you with whole or term life insurance quotes.