Should You Purchase Term or Whole Life Insurance?
Something that all of us need is insurance. And aside from health, home and car insurance, the most important policy to have is life insurance. Not only does it help to cover your medical and funeral costs at the time of your death but it can also prevent your family from having to deal with other potential kinds of debt (like taxes) while providing a substantial amount of money for your surviving relatives to live off of.
So, when it comes to the question of if you should take out a policy, the answer is a resounding “yes!” However, if the follow-up question is if you should purchase term or whole life insurance, interestingly enough, the answer to that is not quite as definitive.
In the effort to help you to decide which option is best for you, we have provided the advantages and disadvantages that come with having both kinds of insurance below:
The Advantages and Disadvantages of Term Insurance
If you are thinking about taking out a term life insurance policy, you will be among the millions of others who do. What makes it different from a whole life insurance policy is that you can only take it out for a certain period of time; customarily for anywhere between 10-30 years. However, the reason why a lot of individuals prefer going this particular route is because the premiums are affordable, the low price of the premium is guaranteed until your policy runs out and should you decide that you would like to make any changes to the policy, it’s relatively easily to do. As far as any disadvantages that are associated with having term life insurance, the two main ones are that if you decided that you wanted to extend your coverage once your initial policy expires, that tends to be pretty expensive. Plus, if you wanted to switch over to whole life insurance, there’s a pretty good chance that insurance companies would deny you that option.
The Advantages and Disadvantages of Whole Life Insurance
When it comes to the whole term vs whole life insurance debate, a part of the reason why some people prefer having whole life insurance is because once you take out this kind of policy, it will be active for the rest of your life. And while initially, that sounds like a really great thing, a big part of the reason people still opt to go with term life insurance is because whole life insurance can get to be pretty expensive. Plus, if you decided that you wanted to make changes to the policy, you wouldn’t be able to do so because whole life insurance is not designed to be amended. There are some good things about it, though. For one, they do tend to generate cash values that can be used while you’re alive. Another bonus is that if you’re someone who is into estate planning, you want to maximize your pension or you have contractual obligations, this tends to be the better option.
So when it comes to deciding which policy is best for you, our recommendation is that you think about your budget, your need for flexibility and what your future plans are. Factoring all three of those things will help you to select the insurance policy that will be just right for you.