A whopping 106 million Americans do not have life insurance or adequate coverage in the case of their death.
Life insurance policies are an important part of any plan for the future. They offer peace of mind, financial assistance, and security to your beneficiaries in the case of your death.
Are you considering taking out a life insurance policy but feel undecided about buying whole vs term life insurance?
Don’t let indecision keep you from protecting your family. Keep reading to find out the differences between term vs whole life insurance and which one is better for you.
What Is the Difference Between Whole vs Term Life Insurance?
Two of the most common types of life insurance are whole life insurance and term life insurance.
With whole life insurance, you pay a premium that gives you permanent life insurance protection that lasts as long as you live. These typically also include a cash savings account that grows tax-free over time. You can borrow or withdraw from this account while you are still alive.
Term life insurance lasts for only a predetermined number of years and does not have any cash value.
How Do I Determine Which Life Insurance Is Right for Me?
Life insurance is a valuable and important investment for your future. But, before you can determine which type of life insurance is better for you and your family, it’s important to understand each one.
Let’s take a look at the pros and cons of each.
Term Life Insurance
Term life insurance is based on a simple, straightforward formula. Along with your insurance broker, you determine the death benefit your beneficiary(s) would receive in the case of your death during a specific term duration. The policy is only valid for a predetermined number of years. After those years, the term life insurance policy expires.
Pros of term life insurance:
- Typically cost much less than other types of life insurance
- Simple, easy-to-understand policies
Cons of term life insurance:
- Only valid for the duration of the policy term
- Is not valuable for tax-planning or wealth-building purposes
Whole Life Insurance
Whole life insurance is permanent life insurance that will not expire until your death, as long as you make the premium payments. It also provides a certain cash value on top of the pre-determined death benefit, making it an additional source of funds for the future needs of your beneficiaries.
Pros of whole life insurance:
- You can borrow or withdraw from the cash component of your policy for financial needs while you are still alive
- Withdrawals and loans are typically tax-free
- You can lock in premiums for the duration of your life
Cons of whole life insurance:
- It costs a significant amount more than term life insurance policies
- You could face a “surrender charge” if you walk away from your policy for any reason
- Any loans or withdrawals from the policy will reduce the death benefits you leave to your beneficiaries
Ready to Buy Life Insurance?
With the knowledge about the differences between whole vs term life insurance, you are ready to get the life insurance plan that is right for you. By taking out a life insurance policy you can ensure that your loved ones are taken care of.
At RBP Insurance, we offer insurance services to cover all areas of your life. From home and car insurance to life insurance and business insurance, we can help you get the coverage and plans you need. Contact us today to get an insurance quote or if you have any questions about our services.