A good life insurance policy is a must in these current times. The type of coverage you need depends on your needs and the budget. There are few options available like the term, whole, and variable life insurance. Term insurance is a quote for a specific number of years, while whole life insurance lasts till you die but only as long as you pay the premiums. But the point of contention is which life insurance is better for you? Let's look at what these two types entail and the pros and cons of both kinds.
Term Life Insurance
Term life insurance quite literally means an insurance quote for a specific term or period. It doesn't have any cash value, but it will give a payout or a death benefit to your beneficiaries in case of death during that term. It is considered as the most straightforward and affordable type of life insurance. Every payment you make contributes to your death benefit. A period typically lasts for 10 to 30 years. Once the term policy ends, you need to get a new policy or convert your term insurance into a permanent insurance policy.
Whole Life Insurance
Unlike a term insurance policy, whole life insurance lasts for the entirety of your life as long as you are paying for the premiums. It is a bit more expensive and complicated, unlike a term insurance policy. Along with a death benefit, it also has a cash-value account, which can act as a source of funds/saving for your future use. The level premium for it remains the same throughout your lifetime. Also, the death benefit remains there as long as the premiums are being paid.
Pros and Cons of Term Life Insurance
An essential benefit of a term life insurance is that it's straightforward and cheap compared to whole life insurance. This gives you more options to make a choice. It will give your family the death benefit in case you die during that particular period. Most new parents opt for term life insurance as it lasts until their children become independent and manage their expenses and quotes.
Some issues with it include the fact that it doesn't give you the cash value account option, so you don't have any funds. In case you need a higher death benefit, the prices of coverage will change.
Pros and Cons of Whole Life Insurance
The best part about whole life insurance is that you have the same premium level, which means that the premiums rate remains the same throughout the duration. A portion of this premium will be added to the cash value account to act as a fund for you. The other amount of premiums are directed towards insurance quotes.
Issues with whole life insurance include, it is costly as compared to term life insurance. It is also very complicated. An example of it is that if you withdraw money from the cash-value account, you reduce the amount from the death credit since both are not separate collections.
Term life insurance is suitable if you are looking for a quote for a limited period and want cheaper rates. Since you can convert it into permanent life insurance later, you can do it later if you can not afford it. Whole life insurance is a better option if you have anyone dependent on you all your life. Another situation can be if you want to leave the cash value account for someone after your death.
The pros and cons of both types of life insurance policies are right in front of you. The decision is all yours now! So, see what you need and grab your quote now!