Life insurance is an essential policy that you should have to cover your loved one’s expenses in the event of your death. No one likes to talk about having to take out this plan, but it is always better to be covered than to leave your family vulnerable in a time of need. What’s more, because there are many different policy options, you’ll be able to find one that is more affordable and fits easily into your established budget. There are two main types of life insurance to be aware of and those include term and whole life coverage. Understanding the differences between these two options can help in making your final decision when shopping around.
What is Term Life Insurance?
Term life insurance simply means that the policy will eventually expire. Most of these term policies are only good for about 30 years before they essentially become null and void. After this time, you’ll need to take out another account and hope to get the same level of coverage. These types of accounts are often the most popular option, since they are relatively easy to get and are ideal for younger and middle-aged individuals.
What is Whole Life?
Whole life coverage basically means that you’ll have this policy for the rest of your life. The account holds cash value as well, so you’ll be able to draw on it in the form of either a viatical or life settlement. Both of these settlements allow you to receive a lump sum of money in exchange for the value of the policy. You can find out the value of your current policy easily online. If you don’t make use of these settlements, you’ll still be left with a large amount of coverage that will be paid out to your loved ones in the event of your death. Your account will never expire unless you stop paying the premium each month.
What are the Pros and Cons of Each?
Term life insurance is ideal for people who are on a budget. These policies are often very affordable, costing only a few dollars every week. However, the account will expire even if you continually make payments each month, and the policy itself will not hold any cash value. Whole coverage is ideal for individuals who want a long-term, permanent solution to their futures. You may want an account that will retain value and can be drawn on in the future if it’s needed.
Which Policy is Right for You?
Before signing up for any type of account, it’s important to take your time doing research. You don’t want to take out a policy that’s either too expensive or not offering enough coverage. Many websites online allow you to compare dozens of different companies before actually making out an application. Be aware that many policies, especially whole life, will require a medical examination. This helps the company to see if you’re healthy enough to take out coverage and if you’ll be paying into it for years. If you’re unhealthy or unfit, the company may see you as a liability and can deny you coverage.