However, it is worth noting that you are likely to need much less whole life insurance than term life insurance. For example, you typically wouldn’t buy enough whole life insurance to cover the cost of your mortgage because your mortgage won’t last your entire life, usually only 10-30 years.
Whole life insurance, if needed, is best purchased as a supplement to life insurance. For example, you can get a 30-year policy to cover your mortgage and family needs, then top it off with a small whole life policy to cover end-of-life expenses, such as your funeral costs or medical bills, and leave behind a legacy.
Do you have a child with special needs or a disability?
If you have dependents who will rely on you for the long term, a whole life policy may be better in this case. A term policy can still be useful for covering big-ticket items like your mortgage, but a whole life policy can help ensure that your loved ones will always be financially protected even after you̵7;re gone.
Are you not a disciplined saver?
You may have heard the saying, “Buy the term and invest the difference.”
Because term insurance is so affordable, it makes sense to own the term and put the money you would have spent on whole life insurance into investments. However, this only really works if you actually invest that difference.
No judgement, but if you’re the type of person who has extra cash at the end of each month and ends up just letting it sit in a checking account or spending it on things you don’t need, then you might want to consider a whole life policy.
Whole life insurance will not only ensure that your beneficiaries will have the necessary funds for your final expenses, but this policy also builds a cash value that you can borrow or withdraw from should you need to (however, there are caveats for this as paying interest.)
» Read more: The differences between term and whole life insurance
Should I buy term or whole life?
Whether you buy term, all or a little of both is ultimately up to you and depends on your lifestyle and financial situation.
Again, in most situations, term life insurance will be your best option. It’s affordable, you have several length options to choose from, and you can customize a policy with one or two drivers if you want.
One of the most important riders is a term conversion rider. Most term policies include this for free.
A term conversion rider allows you to convert all or part of your term policy into a permanent policy. So, if you later decide that you need a certain amount of life insurance coverage for the rest of your life, you have access to permanent coverage through your insurance contract. You do not need to reapply or prove that you are still insurable.
|Term life insurance versus whole life insurance|
Are you unsure how much life insurance you need for your particular situation? Give our life insurance needs calculator a whirl. Answer a few questions and it will give you a good estimate of how much life insurance you should buy.
Remember, if you ever have any questions or would like to discuss your life insurance options with a real person – we’re here to help. Contact us at any time.
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