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Term vs. Whole Life Insurance

May 04, 2022

Which Type of Life Insurance Should You Choose?

Both term and whole life insurance have their pros and cons. Many people are unaware of the differences between term and whole life insurance and, therefore, are unsure which policy would be the best fit.

In this article, we will look at the pros and cons of both to give you an idea of which policy type may best suit your needs. Our advisors are available to help you decide; just contact us.

Term Life Insurance

A term life insurance policy is an insurance plan where the duration of the policy is for a certain number of years. The premium for a term life policy is usually paid every year or every month. The insurance company of this type of policy pays an amount if the policyholder dies during the policy term.

Being a temporary insurance policy means that it has an expiration date. The insured must pay premiums every month to keep the policy active.

This type of policy is great if you have dependents who need to be insured should something happen to you, but you don't expect to have any dependents that need to be covered after age 60.

The main advantage of term life insurance is that it is cheaper than traditional life insurance, and it covers you for the term. Still, the disadvantage is that you may outlive the term, and it is also not as flexible as whole life insurance.

Whole Life Insurance

Whole life insurance is a policy used to provide financial protection for life. The cost for this coverage increases as you age. This is mainly because your health declines as you age, and thus the cost of premiums increases.

Some of the things that make whole life insurance policies very attractive to the policyholder are that it's very flexible, and there are no restrictions concerning the premiums.

In addition, whole life insurance policies have a guaranteed rate of return. This means that the policyholder can completely control the policy, and it has a cash value.

The policyholder can also choose to decrease the coverage of the policy. However, one of the main disadvantages of a whole life policy is that it is expensive due to its locked-in cash value. One of the advantages of a whole life insurance policy is that it allows the policyholder to determine the amount of coverage they need.

Now that you know about the difference between term and whole life insurance, which one should you get? You don’t have to make this decision on your own. Contact one of our financial advisors for assistance.