Smart financial planning involves taking the time to make sure that the family’s assets are maximized to their fullest extent and protected. One of the ways that you can make sure to protect your family in the event of an emergency is by purchasing a life insurance policy. Life insurance will provide coverage and help to prevent financial hardship for the surviving family members. But first it is important to understand the difference between whole and term life insurance.
With that in mind, let’s take a look at the two most common types of life insurance:
Term Life Insurance
Term life insurance is the easiest form of life insurance to get. Not only that, but you can purchase term life insurance from any major life insurance carrier. The policy term can last for as short as a year or for 30 years. It is up to the policyholder and the insurance carrier to decide on the term of the policy. One of the reasons why term insurance is so popular is because it is comparatively affordable versus other life insurance policies. Term insurance is the cheapest insurance that you can get since it does eventually expire at some point and time, and benefits are only paid if the insured dies before the term of the policy is up. Term insurance can get more costly if you need to buy a policy at an older age.
Whole Life Insurance
Whole life insurance is a more expensive version of life insurance but it comes with a whole lot more benefits. For example, whole life insurance can be more expensive when you are younger but can also cost you less as you get older. In fact, one of the big advantages of whole life insurance is the fact that it comes with a guaranteed death benefit and the policy also has a cash value. You can also borrow against the policy or sell the policy based on the cash value built up. This is particularly attractive for a lot of people because it keeps them from losing all their money if they let the policy lapse. Then again, if you are looking to cut costs and/or aren’t concerned about having a permanent policy, you may want to avoid whole life insurance policies altogether.
In the end, choosing the best insurance policy for you will depend upon your budget and your needs.
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