When it comes to buying life insurance there are two routes to go, term and whole life insurance. According to our Financial Insurance Advisor, Nick Deas, the simplest way to consider these two types of insurance are as follows: term life insurance is similar to renting an apartment while whole life is like buying a house. For most people it is a budgetary decision on which works best. We’ve broken down the two insurances below to give you a better idea of what works best for you.
Term Life Insurance
Now that we’ve made the comparison of term life insurance, it’s time to understand some of the advantages and disadvantages. Term life insurance provides coverage for a defined period of time, such as 10, 15, 20, 25 or 30 years. As a term insurance policyholder you pay an annual premium amount for the defined period of time and the insurer, or the company you purchased your policy through, will pay your beneficiaries the pre-determined policy amount. It is affordable for most young and healthy individuals, and as life expectancy increases prices decrease. One of the biggest drawbacks to term insurance is pay out only occurs approximately four percent of the time. Don’t worry if you got term and now you want to switch to whole life. Term is generally convertible to meet your needs.
Whole Life Insurance
In a whole life plan, the money put into a whole life plan is after tax dollars. Pulling money out of the account is not penalized on a whole life policy. The money is important to have throughout your life and especially when your kids are still on your tab. Your life insurance policy may pay your child’s college tuition if there is a tragedy ends with a pay out. As you get older the amount of money you need is not as great, but some source of money will be needed to cover funeral expenses and other post mortem costs.
These types of insurance are not exclusive and are stackable to get maximum coverage. Understand that life insurance premiums are a commitment and as such they require payment year after year to benefit you. If you have any other questions about your insurance give Nick a call at 352-371-7977 or email him at [email protected]
