Life Insurance: Whole versus Term
What Kind of Life Insurance is Right for You?
Your search for a life insurance policy can get pretty overwhelming. There are so many confusing terms and conflicting information which can be a source of frustration for many consumers. The main terms you will hear in your search for life insurance are term life and whole life. Both describe types of life insurance policies that you can get.
One Size Does Not Fit All
Your specific situation will determine what type of life insurance policy you need. For many consumers, a term life insurance policy is the best choice. Term life insurance provides coverage for a specific period of time or term such as ten years or forty years. Many individuals opt for a term life insurance policy that will last until their youngest child is either an adult or finished college. Term life insurance can be purchased for as little as $200 per year. Term life insurance policies really only pay out when you die.
The Cost Factor
Whole life insurance is much more expensive than term life insurance. Whole life insurance can cost $6,000 or more per year, but the policy builds value and can be cashed out. A portion of the money you pay towards your whole life insurance can accumulate as a guaranteed cash value. For many individuals, the ability to borrow against their life insurance policy comes in handy. Individuals with certain preexisting health conditions sometimes opt for whole life insurance policies because that is all the life insurance company will offer them.
How Long Do You Need?
Ultimately, whether or not you decide to get whole life insurance or term insurance depends on how long you keep you plan to hang onto the policy. If you want a policy for the long term, you might be better off with whole life. It’s important to clearly evaluate all of your options before you make such as serious decision about life insurance.