Term Life Insurance VS Whole Life Insurance comparison.
First and foremost, we buy life insurance to provide them to our families in case we pass away unexpectedly. Another consideration when looking at life insurance is term insurance vs. whole life. What you choose depends on your circumstances, wants and needs.
Term life insurance is the insurance that pays the face value of the policy to the beneficiary when the insured dies during a set amount of years. With term insurance, you’re covered only during the life of the policy, while you’re paying the premiums.
Whole life insurance includes investments that can increase in cash value. Some people borrow against their whole life insurance policy. When you die, your family also gets the face value of the policy. It is designed to cover you for your whole life. These policies charge you a fixed premium each year that’s higher than term insurance.
Pros and Cons of Term Life:
- Lower premiums - it is usually the least expensive policy.
- Full payout - the beneficiary receives the full amount of the policy if you die within the term.
- Term limit for policy - it's for a set duration of time, often ranging from 5-30 years. Once the term is up, renewing will increase the cost.
- No cash value - you won’t build up cash that you can borrow against down the road.
Pros and Cons of Whole Life:
- Stable premiums – there's no increase in your premium and continuing to pay your premiums, your beneficiary will receive the benefits upon your death.
- Cash value - you gain interest as the cash value increases.
- Higher premiums - it is usually higher than that of term life insurance, and that can stop a lot of people.
In the end, many benefits are valid to each type of coverage, as well as distinctions. One thing is certain: Make sure you have coverage that’s adequate for you and your family.
