Is Whole or Term Life Insurance Right for You?
In the life insurance business, there are two divisions of policy, term life insurance and whole life insurance. Term life insurance is most likely what you already have if your company provides you life insurance. It's a short-term policy that needs to be renewed anywhere from one year to every thirty, with an increase in premiums annually. Term life insurance only lasts as long as you hold the policy – it's a way of protecting your family "just in case."
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Whole life insurance is different. For one, it's meant to last until the end of your life so your family is guaranteed to receive benefits, whether you are currently employed or have been retired for 30 years. Another reason is that, for people, the premiums stay the same throughout the rest of your life. The catch is that the premiums are much more expensive with whole life than they are with term life.
Why is whole life insurance so costly?
Why is whole life insurance so expensive? Well, for one, you are avoiding any future increase in premiums that someone with a term life insurance policy might see. What you over-pay in your first years of owning a whole life policy is put into a "savings account," that is invested by the insurance company. This pays off, especially for those who purchase whole-term life insurance policies early on – after 20 years, the premiums are almost entirely paid off and you still have a level bill from the year you purchased the policy.
This is not to say whole term life insurance is for everybody. It's meant for people who are looking into the long haul, looking 20, 30 even 50 years into the future. For those just looking for an emergency umbrella for their loved ones, term might be a better economical choice. To know more about which type of life insurance suits your needs, request a free quote today.