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Term Versus Whole Life Insurance

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Term Versus Whole Life Insurance

The Beatles vs. Elvis. Star Wars vs. Star Trek. Term vs. Whole. When it comes to shopping for life insurance the decision on whether to get a term or permanent policy is the end-all debate.

Term life insurance advocates say it’s the better option because of its affordable pricing and ample coverage. Others insist permanent life insurance is the way to go because it offers lifetime coverage and a cash value component.

The fact is there are pros and cons to both types of life insurance. When choosing the right coverage for you and your family, it’s important to consider how much of your budget you’re willing to allocate to life insurance coverage and how long you need this type of financial protection.

Term Life Insurance

There’s a reason many experts recommend purchasing term life insurance. It’s one of the simplest and most affordable types of coverage. Its characterized by its set term lengths of coverage – typically 10, 15, 20 or 30 years. If you were to die during the term length, your beneficiaries are paid an income tax free death benefit equal to the policy amount you purchase.

The right term length for you might be until your kids are financially independent, your mortgage or student loans are paid off, or you’ve accumulated enough wealth to cover debts or final expenses. (And, choosing the right term length is very simple with an online term life insurance calculator.)

Once the term length is up, coverage ends or you have the option to extend it further, but the premium price will be significantly higher since you’ll be older and likely less healthy.

Term life insurance allows buyers to get higher amounts of coverage for a significantly lower cost compared to other life insurance policy options like whole, universal or even burial policies.