Term Vs. Whole Life- What's The Difference?
Rink Partridge Agency, Inc.
Mar 01, 2022
Everyone deserves to have a secure financial future, and that’s why life insurance is important. When deciding on life insurance coverage, one of the biggest decisions to figure out is what type of policy best fits your needs. Each type of life insurance policy has pros and cons and the best option for you depends on a few different factors.
Term Vs. Whole Life
As we begin to compare term life and whole life insurance, two of the most recognized differences are the coverage period and premium cost.
Term Life
Term life insurance is often the more popular choice because it has a significantly cheaper premium and is designed to provide financial protection for a specific number of years. If you die during the duration of the policy, your beneficiaries get the death benefit payout. Once the term of the policy expires, typically there are fewer financial responsibilities and no longer have a need for a life insurance policy. At this point, there are often fewer debts as they have been paid off and there are retirement savings that take over for the life insurance funds.
Whole Life
Whole life insurance is a type of permanent life insurance which includes a cash savings component and stays active for your entire life. The cash value can be used to take out loans or used as a saving mechanism for retirement once the account matures. One thing to consider when thinking about the cash savings options that a whole life policy offers is that other investments usually offer a higher interest rate to invest in and there are penalties that apply if you cancel the coverage.
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