When To Buy Term Life Insurance
The vast majority of those who invest in life insurance choose a term life policy. The number one reason is that this type of policy is much more affordable than the alternatives. Also involved in the decision is that a term life policy is adequate to the needs of many – so why buy more than you need?
How does term life work? It’s like this: you buy a policy that will keep you covered for a specified number of years (a specific “term”) and pay a specific premium per month during that period to keep the policy active. If the insured individual dies within the term of the policy, his or her beneficiary receives the full death benefit. It’s that simple.
If you have other plans for providing for your loved ones after you die, provided you don’t “die early,” you can just use a term policy. For example, you can time the policy to expire when you retire and pension and social security benefits will kick in, when your mortgage will be paid off, or when you kids are adults and already through college.
You can usually buy a term life policy that lasts for 10, 20, or 30 years – though other terms are possible too. And you can also, if you wish, arrange for the death benefit and corresponding premiums to gradually decrease as you near the end of the term.
When To Opt For Whole Life
Given what we said above, why would anyone ever choose whole life, especially since it costs a lot more? The answer is simple: the death benefit is guaranteed regardless of when the insured passes away. If you want to ensure that you get back what you pay into your policy – plus some, in the long run and that your family will for sure have a benefit eventually, then whole life is for you.
Additionally, whole life insurance policies have a “cash value” that accrues gradually throughout the life of the policy. This means you can cash it in for a certain amount OR borrow against it at very low interest rates. If you borrow from your benefit, the benefit temporarily decreases till you repay the money – but if you borrow against it instead, then your benefit is not affected.
You normally have to keep paying premiums until age 100 (or as long as you live), but you can get limited term whole life where you pay for 10 or 20 years only but have the benefit secured regardless of when you pass away.
To learn more about how term and whole life insurance work and how to know whether to buy one, the other, or both, contact Flagler County (FL) Insurance Agency today!