Term Life Insurance
Term life insurance is purchased for a certain amount of time, or a term. Many people look for a period of ten to thirty years. In other words, they are seeking to cover their lives for their working years, or the period when a home mortgage is being paid off and children depend upon them. They may feel that after the term of their policy they will have enough money saved to replace their need for life insurance.
When the term is over, the policy has ended. In most cases, that is the end of the relationship between the insurer and the insured. Sometimes an insurance company will offer a permanent or whole life insurance company at a much smaller face value to cover something we call final expenses. However, since the insured person is much older, and may have developed health issues, the premium for this type of whole insurance will be higher for a lower death benefit.
Whole Life Insurance
A whole life policy, as the name implies, will cover an insured person for their whole lives as long as the policy is in force. Most of the time all an insured person needs to do to keep the policy in force is to pay the premiums. Some whole life insurance policies can be "paid up" over a period of years. So with this type of policy, an individual may pay all the premiums over ten to twenty years, and then know that they will have life insurance coverage no matter how long they live.
Whole life insurance policies can build a cash value too, so instead of being "pure insurance", they can also be a savings vehicle. The value of the whole life policy can be cashed in or borrowed against, and can count as an asset for a person.
Term Vs. Whole Life Insurance
So which is better -- term life insurance or whole life insurance? Well, during a person's working years, and those years when many people may depend upon their income, the larger face value for less price on a term policy is attractive. However, that term may expire just when it will be harder for that person to obtain insurance!
I would suggest combining both types of policies to meet both needs. Choose a smaller face value whole life insurance policy to provide lifetime insurance coverage. Then select a term policy that is slightly smaller than the the estimated needs to provide the build of insurance coverage during working years.
How Much Life Insurance Do You Need, and How Much Will It Cost?
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