Broker Check

Term or Whole Life, Which one is best?

| December 02, 2022


     Life insurance is a very intricate tool. Most people only think of it as insurance that takes care of the expenses of your loved ones left behind. This is true of life insurance in general. Depending on what you’re trying to accomplish or protect, a term or whole life policy may fit your lifestyle in different ways.  

     Term policies can be great. They are the most inexpensive way of getting the largest death benefit, for the smallest premium. Term policies are less expensive, because they are only good for a certain number of years, usually ten to thirty. Term policies can be great for someone who believes in insurance but is not ready to pay a larger premium for a permanent policy.  

Most term policies have a convertibility feature, which allows the insured to take a potion or their entire benefit and convert it into a permanent policy without having to do a medical exam. This works great for someone on a low budget, who is planning on having life insurance in the future. Term insurance also works well for someone who only needs coverage for a limited time. Term insurance can be used to cover outstanding balances on a mortgage, boat, or other items, to make sure that if you were to pass away before your payments end, you know that your loved ones aren’t stuck with the bill. 

     My favorite feature about whole life insurance is the fact that it’s permanent. It doesn’t matter at what age you pass away; your beneficiaries will receive a death benefit. That means, it’s guaranteed to pay. Because of this the cost for whole life can be much more than the premium for term insurance. Whole life insurance also has what’s called cash value. This is almost like a forced savings account, where you can withdrawal or take tax free loans, once the policy cash value grows large enough. 

     When it comes to choosing term vs. whole life insurance, it should really come down to what you are trying to accomplish with the insurance and how long you need it for. If you ever have any thoughts or doubts, it’s always best to speak with an experienced agent.