Everybody knows you need home insurance, car insurance, and health insurance. They’re no-brainers to protect you in case the unexpected happens. But there’s one more type of insurance that too many people overlook: life insurance. If you have loved ones who depend on you, you can’t afford to go without life insurance.
Of course, it’s uncomfortable to consider the unthinkable happening to you or your spouse. But it’s important to remember that having quality life insurance can be the best way to protect your family financially if something happens to you.
When you start investigating your life insurance options, you run into a big question: whole or term? Choosing between these two main types of insurance can be confusing for first-time buyers. What follows, is a side-by-side comparison so you can decide which insurance is right for you.
Term Life Insurance
A Term life insurance policy is one of the simplest and more affordable solutions for life insurance. For a set period of time, or term, (25 years, for example), you pay a typically low monthly fixed premium. Should you pass away during that term, your survivors receive a set benefit ($500,000, for example). Premiums are based on your age and health at time of purchase, and on the benefit amount. This policy is designed to give your beneficiaries a payout during the specified term, giving you peace of mind that your loved ones will be cared for if something unexpected were to happen.
Many people choose to purchase term life insurance when they have their first child, with a term that would see that child into adulthood. This type of policy may help provide financial relief to a surviving parent, who is left to handle family expenses on their own should the worst happen.
One potential drawback to keep in mind with a term life policy, is that if you outlive the term, your policy will end, and you will no longer have coverage.
Whole Life Insurance
A Whole life insurance policy is permanent life insurance. It gets its name from the fact that it never expires, as long as premiums are paid.
An advantage of whole life insurance is that it includes a cash value component. A portion of your premium earns interest, and you can withdraw or borrow from it as needed. This is a benefit you can take advantage of while you’re still alive. You can also choose to add money to your cash reserve, building up value over time. This type of life insurance can bring guarantees to your overall financial plan.
As you can see, the biggest difference between term and whole life insurance policies is that, as long as the premium is paid, a whole life policy provides lifelong coverage which includes an added cash value component. Term life is only valid during a specific period of time.
At Partners Insurance Group, we understand that every person’s situation is unique. Purchasing life insurance is an important and very personal decision. If you’d like more information about your options, please contact us today at 508-491-3100. We’ll work with you to find the right coverage for your needs.