Learn about the pros and cons of whole life and term life insurance.
If you’re looking to buy life insurance, then you probably know that there are two common types: whole life and term life. But how do you know which type of policy is right for you? Learn more about each of these policies to help you determine which offers the right coverage to suit your needs.
Whole Life Insurance
Whole life insurance provides coverage that does not expire. This means that, so long as you pay your premiums, your beneficiaries will receive compensation regardless of when you die. Additionally, whole life insurance policies have a cash value component that increases (or decreases) the longer you have the policy. This cash value allows you to borrow against your policy or close your policy at any time to receive its cash value.
- Pros: A whole life policy can be useful as part of a custom finance strategy.
- Cons: This type of policy is only really beneficial to individuals with a lot of assets and income to play around with. Additionally, these policies tend to be more expensive and they pose the risk of your cash value actually decreasing over time.
Term Life Insurance
Term life is what most people imagine about when they think about life insurance. The policy holder sets a term (normally between 10-30 years) and pays their premiums during this time. If you die during your term, your family will receive an agreed upon benefit. However, if you die after your policy has expired, then your insurer has no coverage obligations and will not pay the benefit.
- Pros: A term life policy is more affordable and less complicated than a whole life policy. You do not have to worry about hidden fees, exclusions, or risks with your policy. Additionally, you have the ability to cancel your term before your policy expires.
- Cons: You have to be wary about your policy’s expiration date. If you still need coverage after your term ends then you’ll either have to renew or find a new policy.
When it comes down to it, choosing between whole life and term life insurance depends on your individual situation and circumstances. Whichever policy you choose, it’s important to make sure you have an insurance team you can trust. To find the right policy for you, turn to the dedicated team at Weaver & Associates in Arcadia, California. Our insurance experts are ready to assist you with all your insurance needs. Contact us to get started today.