Buying life insurance is a safety net for anyone who depends on you when you’re no longer around. When you’re gone, the money can be used to cover mortgage payments, funeral costs, tuition expenses, and more.
Term Life and Whole Life
There are two types of life insurance: term life insurance and whole life insurance. Term life insurance is much easier to understand due to the simple policy structure & is more affordable.
Whole life insurance tends to be more complex & costly. However, with this complexity comes extra benefits. Whole life insurance is one of the simpler versions of permanent insurance, which includes universal, variable, and variable universal coverage.
Here’s what you need to know about these two types of insurance:
Term Life Insurance
A term life insurance only covers a certain period. This is also commonly referred to as “pure life insurance” as it protects your dependents, such as children, in case of your unexpected death. If you have a term policy active when you die, the proceeds are given to your dependents.
How long this term lasts will depend on you. Some terms go up to 30 years, but all of these terms have a death benefit that will stay the same throughout the entire policy.
Choosing the Right Term Life Insurance
When selecting which term life insurance best fits you, there are several considerations. First, make sure that the term follows the same time you’re paying bills. The life insurance should cover the costs of your bills in case you an untimely death.
Second, buy the amount your family will need if you’re unable to provide for them. That amount will act as a substitute for your income and will help to pay off services, such as childcare.
Finally, the term should end around the time your family won’t require it anymore, like when your kids are on their own or when you’ve paid off your home. This way, you can start saving money to serve as a financial safeguard.
Explaining Whole life Insurance
Whole life insurance covers your entire life, it also has an investment component. This component is known as ‘cash value’. Over time, the cash value grows – the great thing about this is that you won’t have to pay tax on any profits. Later on, you’ll be able to trade your insurance policy for the money if you wish to. You could also borrow money against your plan, but if you do not pay it back, your death benefit will be reduced. If you trade your insurance policy for cash, you will no longer have active coverage either.
Why Whole Life Insurance is the Simplest Permanent Life Insurance
If you’re looking for life insurance, get in touch with us today to see how we can help.
Whole Life Insurance includes a guaranteed death benefit and an increase in cash value at a set rate. Your premiums will also last as long as you’re alive. Some whole life policies can even receive dividends – you can either take the dividends or leave them as a deposit to earn interest.
With dividends, you’ll also be given the option to decrease the premiums, buy extra coverage and pay back loans. However, receiving dividends isn’t a guarantee.
Term life insurance is cheaper as they do not have any cash value and is only temporary. In most cases, the death benefit will never be received, because you’ll outlive the term.
Whole life insurance, on the other hand, costs more as it covers your entire life. It also has cash value policies and a fixed rate of return on investment depending on how much you pay.
If you’re looking for life insurance, get in touch with us today to see how we can help.
