Finding the right type of life insurance for you isn’t easy, but knowing the differences between term life insurance and whole life insurance will make the decision easier and possibly save you money in the long run.
Term Life Insurance:
Benefits:
– Being able to have coverage for a limited period of time, while also a disadvantage, gives you the ability to have life insurance for a period of time when you are unsure of your safety.
– Much lower price than permanent insurance. This is thanks to the low cash-out rate of the policies and the competitive rates between companies.
Disadvantages:
– There is a 99 percent chance that you will get the free insurance. Only 1 percent of term policyholders die within the duration of coverage. However, many companies allow at least one coverage extension.
– Adjustable rates can be a big drawback if rates spike suddenly. The only way out of that situation is to cancel the coverage.
Permanent Life Insurance:
Benefits:
– Coverage lasts until the policyholder’s death unless they stop paying their monthly premiums. Also, almost all companies stop making the policyholder pay once they turn 100 and continue coverage until the time of death.
– Don’t worry about the end of coverage.
Disadvantages:
-High price. Permanent is much more expensive than term if only because most policyholders are covered until they die, effectively cashing in on the policy.
– Having coverage for a long period of time can end up paying much more than the coverage covers.
Choosing term life vs. whole life insurance is a difficult one, but if you know your needs then you should be able to weigh the pros and cons effectively. Either way, most insurance agencies offer both types of coverage, so a quick search online can give you a lot of information on where to get coverage.
If you’re not sure which type to get, talking to an insurance agent should give you a clear idea of what you need, not what you want. An agent can also rule out companies they wouldn’t approve underwriting for, effectively shortening your insurance shopping time. At the very least, consulting an insurance agent will give you a clearer answer to the term vs. permanent life debate.
