Posted on: 6 June 2017
Thinking about death can feel quite morbid, but it is a reality you will need to deal with at some point. When planning your personal finances, having life insurance can be a great way to provide financial stability to your family after passing away. Getting a life insurance policy isn't a simple decision, since there are different types of insurance that may fit your needs in different ways. Here are the main differences between term and whole life insurance options.
Term insurance is only offered for a specific period of time. The length of the term and the age you purchase the insurance are what will determine the premiums on the life insurance policy. In addition, factors like how often you drink, smoking, your personal health, and family health history can all play into the final premium price. Thankfully, the policy will never change in price once you get the policy, which allows you to budget for those insurance premiums over the years.
Term insurance will have the cheapest premiums, which makes term insurance ideal for people who are looking for financial security without needing to pay a lot of money. People often purchase a term insurance policy if they have large debts that need to be paid off, such as a mortgage, and don't want the financial burden to be placed on another person after they pass away.
Some people prefer whole life policies because there is a guarantee that the policy will eventually pay out if you make those premium payments. Since whole life policies are often paid out to their beneficiaries, if is typical for a whole life policy to be much more expensive than a term policy.
The main factor in deciding the premium of a whole life policy is how soon in life you purchase it. When you purchase a whole life policy while you are healthy and young, the premiums will be lower over the years. On the other hand, purchasing a policy late in life can cause the premiums to be expensive.
Whole life insurance also allows you to borrow money from the policy for large purchases, but at the expense of lowering how much will be paid out in the end. You do have the option of paying back the borrowed money to restore your payout.
Speak with an insurance agent, such as Advantage Insurance Agency, Inc, for more info about life insurance policies.Share