Life insurance is a great idea but choosing between whole vs term life insurance can be very confusing. Even though both whole and term life insurance have unique benefits, they may not all be right for you. You need to understand the differences between the two types of life insurance coverage before making your decision. Your decision should be based on your objectives and financial needs of your beneficiaries.

Features of Term Life Insurance

• It only provides death benefits
• The payments get more expensive as you age
• Your beneficiaries will only receive benefits if you die while the term is still active.
• You can convert it to whole life insurance
• If you want the coverage to go beyond the length of its term, you must renew it.
• It is the most affordable life insurance policy
• It is purchased for a specified term.
• It can act as temporary additional coverage when purchased along with permanent life insurance.

Features of Whole Life Insurance

• It covers you for the rest of your life
• It has cash value
• It is more expensive than term insurance
• Its cash value is based on the value of return on investment
• You can withdraw a part of the cash or borrow while the policy is active

Whole Life Vs Term Life Insurance

The decision on whether to purchase term or whole life insurance depends on your age, health, your debts, your financial situation, future financial needs of your beneficiaries, when you plan to retire, and whether you need an additional savings retirement plan. Compare whole and term life insurance to establish the one that works for you.

With term life insurance, your premium payments are only there to pay death benefits to your beneficiaries. If you want more, whole life insurance may make more sense for you. With whole life insurance, the premium payments build cash value over the years. You can use it later or add it to the payout made to your beneficiaries.

If you are looking for long-term coverage, whole life insurance is a perfect choice. Term life insurance is a great choice for those who are looking for coverage over a short period.

Term life insurance is different from whole life insurance when it comes to premium payments. If you are unable to pay a lot of money into it, consider getting term life insurance. The payments are much lower than premium payments of whole life insurance. Remember that you can convert your term life to whole life insurance if you wish. There are instances when this may be the right choice. They include;

• When your term life policy is about to expire
• When you need to set up a trust in your will
• When term life insurance is getting expensive due to your age
• When you want to set up an estate.

Should You Buy Both?

You do not have to choose. Some people choose to buy both whole and term life insurance. They are usually people who have whole life insurance but are looking for extra coverage in the short-term.

If you have term life insurance but you wish to invest extra money into a long-term investment, you may purchase whole life insurance. It will help you with estate issues or during retirement.

Whole life and term life insurance are important both helpful but they are suitable for different people. Understand your needs and objectives before making a decision.