There’s a constant argument between term vs. permanent life insurance. Many people are confused about whether it’s better to get life insurance for a specific period or their entire life. However, a closer look into these types of insurance should be able to provide you with all the answers you need.
What is Term Life Insurance?
Term life insurance is perhaps the easiest to understand because it is straightforward insurance with no frills. The reason to get it is to ensure that your beneficiary will receive a death benefit. However, it is only if you die while the policy is active.
This bare-bones type of insurance, as the name indicates, is only good for a fixed period. It could be five, twenty, or thirty years. After that, the policy comes to an end.
What is Whole Life Insurance?
Whole life insurance is a sort of permanent life insurance that differs significantly from term life insurance in two ways. For one thing, it will never expire as long as you keep paying your payments. It provides some “cash value” in addition to the death benefit, which you can utilize to fulfill future financial needs.
Considerations to make
So, how can you know which type of insurance is best for you and your family? If you can only afford term insurance, the solution is simple: it’s better to have any protection than none.
The decision is more difficult for people who can afford the much higher rates associated with whole life insurance. If your goal is retirement savings, fee-based financial consultants recommend starting with 401(k)s and individual retirement accounts (IRAs).
Some customers have specific financial needs that whole life insurance may be able to assist them in a meeting. For example, parents with disabled children may look into whole life insurance, which protects them for the rest of their life. You may rest comfortably that your children will get the death benefit from your policy if you pay your payments.