Term Life Or Whole Life – Which Is Best?

Term Life Or Whole Life - Which Is Best?
Once you’ve decided that you need a life insurance policy to protect your family’s financial future when you are gone, you will soon learn that there are two major types of policies – whole life and term life.
How do you decide which one to invest in? And when does it make sense to buy both? To learn the answers to these questions and more, read on!

Why Choose Term Life Insurance?
There are many good reasons to opt for term life. A term life insurance policy is one where the benefit only applies for the duration of a specific amount of time. It is meant to protect your beneficiary against financial ruin or hardship should you pass away within the policy’s term.

You can typically buy 10 or 20-year term life policies, though some insurers may offer 5-year increments or even single-year policies. This kind of policy is very affordable and can provide a large benefit, but it is only meant as a safeguard against an “untimely” death and does not provide a benefit should you pass away after the term has expired – unless you renew the policy.

Many times, people with small children, kids going through college, or a home mortgage carry term life. Others tend to buy term to cover them only up until retirement.

When Is Whole Life A Better Option?
While there are many variations on whole life, the basic idea is that the benefit is guaranteed regardless of when the insured passes away. Whole life costs more in premiums, but it guarantees a benefit and also can acquire cash value.

Regular whole life requires you to pay premiums for life or up until an advanced age like 80, 90, or 100. Limited-term whole life may only require 10 or 20 years of payments but cost a bit more per payment.

If you want to be sure your loved ones are taken care of when you’re gone, whole life can be a big part of accomplishing that. It is also sometimes used as a way to create a tax shield and assist in inheritance and estate planning. Some forms of whole life or similar policies may also allow investment income gains – universal life is the most suited for investment purposes, however.

Does It Ever Make Sense To Buy Both?
Just about everyone is better off with a life insurance policy than without one. Which policy-type is best will vary from person to person based on their goals, budget, and circumstances. That’s why it’s best to discuss these matters with an experienced life insurance agent before making a final decision.

In some cases, it makes sense to carry both term and whole life – at least temporarily. You may want to basically go with whole life, for example, but bolster it with term life during a critical period. Or, you may want to begin with term life and then later “upgrade” your policy to whole life, while locking in a lower rate than you would otherwise pay.

Life insurance can be quite complex, to say the least. Knowing how much and which kind to purchase and how to structure your policy isn’t easy for a beginner. For help in choosing a policy or for a free, no-obligation life insurance quote, contact Flagler County (FL) Insurance Agency today!