Insurance can be a confusing subject and at our local agency we want to clear up some basic questions for you. Most families put some type of life insurance in place, and figuring out whether to buy “whole life” or “term” is the big question. There are very different insurance products, each with pros and cons.
1. Life insurance is cheaper, but doesn’t build an asset that you can borrow from or access for illness or disability. Most young families live on a carefully managed budget and may not yet have the capacity to purchase whole life insurance. The premiums you pay for whole life insurance cover you for a period(s) and in many cases can later be converted to whole life insurance, which can create a valuable asset for you.
2. Whole life insurance policies protect you for your lifetime, whereas term is only for a period, usually 10 years. Whole life insurance builds value over the years you pay it in and has a guaranteed cash value. Some whole life insurance policies give you benefits in addition to life insurance; these benefits are called living benefits. You can borrow from your own insurance if you need to, as well as access payments if you suffer a terminal illness or disability. Each insurance policy offers different benefits, and you need to find the one that is best for you. Generally speaking, whole life insurance is a much better investment (because it builds value for you), but if you have limited funds, term is a good temporary solution to protect your family.
3. Term life insurance will have increasing premium payments if you renew, while whole life insurance will have level payments, often with the premium payments at a guaranteed level for the life of the policy. Making a decision about what type of insurance to buy will be based on your financial situation and your overall savings plan.
Our local agency will be happy to meet with you and show you the different types of options available that may suit your situation. New types of plans come on the market from time to time, and it’s worth making us do the work to find the best deal available right now. Since we’re right here in your community, it’s easy to get in touch with us and we’re always happy to answer your questions. Let us know what you need!