| Whole Life Insurance Vs Term Life Insurance |
Whole Life Insurance -Versus- Term Life Insurance
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First and foremost, we buy life insurance to provide for our families in case we pass
away unexpectedly and cannot provide for them any longer. This may sound simple,
but sometimes life insurance products are designed to do more than this basic function,
and that's where buying life insurance gets complicated.
Term life insurance is the purest form of coverage. It is purchased for a period of
time, or term, and when that period of time expires, the life insurance ends. It is
common to buy a term policy for 10 to 30 years, though different periods are available.
So if you die you win (so to speak). Recently new benefits and riders have been
incorporated with term life insurance to make it more attractive such as Return of
Premium (see glossary), disability benefits and critical illness. Even though the
policies are temporary, a term policy is usually the cheapest life insurance to buy, and
is the choice of most younger families.
away unexpectedly and cannot provide for them any longer. This may sound simple,
but sometimes life insurance products are designed to do more than this basic function,
and that's where buying life insurance gets complicated.
Term life insurance is the purest form of coverage. It is purchased for a period of
time, or term, and when that period of time expires, the life insurance ends. It is
common to buy a term policy for 10 to 30 years, though different periods are available.
So if you die you win (so to speak). Recently new benefits and riders have been
incorporated with term life insurance to make it more attractive such as Return of
Premium (see glossary), disability benefits and critical illness. Even though the
policies are temporary, a term policy is usually the cheapest life insurance to buy, and
is the choice of most younger families.
Whole (or permanent) life insurance, on the other hand, is designed to cover a person for their whole life. It
builds a cash value or "savings account", and so is a combination of life insurance and savings. As long as the
policy is paid for, or paid up, the coverage will be in force. Because of this, whole life insurance is more expensive. If
you live, you get back at least some of, or more than, the amount you spent on your premium. You get this money
back either by cashing in the policy or by borrowing against it
The key is how long you plan to keep the policy. Most financial advisors will tell their clients, especially younger
clients, to purchase term coverage. They do this because term policies are much cheaper, and the extra money can
be used for other investments that may provide better returns than whole life policies. In most cases, this is probably
good advice, especially for large amounts of coverage that growing families need.
I would suggest buying a larger face value term life insurance policy with a large enough face value to cover a home
mortgage, living expenses, and education. But I would also advise many clients to consider the purchase of a
smaller whole life insurance policy, especially one with a ten year payoff. That way, when the person retires, they
can be secure in the knowledge that their beneficiaries will get the benefits to settle final expenses.
Click here to get a free life insurance quote.
builds a cash value or "savings account", and so is a combination of life insurance and savings. As long as the
policy is paid for, or paid up, the coverage will be in force. Because of this, whole life insurance is more expensive. If
you live, you get back at least some of, or more than, the amount you spent on your premium. You get this money
back either by cashing in the policy or by borrowing against it
The key is how long you plan to keep the policy. Most financial advisors will tell their clients, especially younger
clients, to purchase term coverage. They do this because term policies are much cheaper, and the extra money can
be used for other investments that may provide better returns than whole life policies. In most cases, this is probably
good advice, especially for large amounts of coverage that growing families need.
I would suggest buying a larger face value term life insurance policy with a large enough face value to cover a home
mortgage, living expenses, and education. But I would also advise many clients to consider the purchase of a
smaller whole life insurance policy, especially one with a ten year payoff. That way, when the person retires, they
can be secure in the knowledge that their beneficiaries will get the benefits to settle final expenses.
Click here to get a free life insurance quote.
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