Which Is Better: Term Life Or Whole Life?

Which Is Better: Term Life Or Whole Life
Around 60% of US adults have some form of life insurance, even though some 85% say one really ought to buy a life insurance policy. That gap is unfortunate, and it may stem from many causes. But one reason people are reluctant to invest in life insurance may be they simply aren’t sure which kind of policy to invest in.
It’s true there are many misconceptions about life insurance in general, but there is also a lot of confusion over the difference between term life and whole life and how to know which one is right for you.

Here are the basic facts about term versus whole life to help you make an informed decision:

How Term Life Insurance Works
Term life is the most popular choice by far, but it isn’t for everyone. Plus, there are many different term lengths and other features you can add or not.

But here is the basic way that term life works:

  • You buy coverage for a specified number of years (a “term”), be that 10, 20, or 30 years.
  • If the policyholder passes away during the term, a death benefit is paid to beneficiaries.
  • If your term ends, you would have to renew the policy or find a different insurer or just go without coverage from then on.
  • Policy renewal is not guaranteed and would be at a higher rate since you would be older at that point.
  • The younger you are, the shorter the term, and the lower the death benefit, the cheaper the policy is.
  • This is the most easily affordable and simplest form of life insurance on the market.

How Whole Life Insurance Works
There are many additional benefits to be had by investing in a whole life policy, although, it does cost more and isn’t for everyone.

But before you decide for term as if that were the only option, be aware that it’s not: whole life has much to offer. Here is how it works:

  • You buy coverage for your “whole” life, not just for a specified time period.
  • You never need to renew the policy. So long as you pay your premiums, your policy stays in effect.
  • Your policy not only pays a death benefit but also accumulates a “cash value” as it matures.
  • It can take 10 to 15 years before the cash value of the policy is substantial.
  • You can “borrow” on the policy’s cash value and then later repay it. This won’t cancel your policy but simply lower the death benefit until the money is repaid.
  • You normally have to pass a health exam to get whole life, unless you are willing to pay a higher premium for a policy that doesn’t require a preliminary health exam.
  • The premiums begin high and then gradually decrease over the years.
  • Whole life can save you money in the long run, even if it costs more, especially in the early years of the policy.

Making The Decision
Which is best: term or whole life? That depends on your situation and what you want out of a life insurance policy. Term life is cheaper and offers sufficient coverage for many people’s needs; whole is more expensive but is permanent and more versatile. Also remember you can use term temporarily and then convert it to whole life later.

To learn more about term versus whole life or for a free quote, contact Flagler County Insurance Agency today!