There are many different types of life insurance, and people are often confused about what policy is right for them. We’ll explain the difference between term life insurance and whole life insurance so that you can make an educated decision about your family’s financial protection.
Term life insurance is a policy that covers you for a specific amount of time. Most policies have 15, 20, or 30 year options. If you pass away during the term of your policy, your beneficiaries will receive the death benefit which typically covers your funeral and burial expenses, any outstanding bills or debt that you have, and replace your income for period of time. Term life insurance usually provides between $100,000 and $400,000 worth of coverage, but you have the option of getting less coverage or more coverage. If you outlive the term of your life insurance policy, you usually have options to get all or some of your premiums back; from there you can choose to get another term life policy or switch to a whole life product, like final expense insurance.
Whole life insurance is insurance that covers you for your entire life; this means that the death benefit is guaranteed because you can’t outlive the policy. There are several different types of whole life policies, like child life insurance and final expense insurance. Child life insurance is a policy that parents or guardians get for their children so that they will be guaranteed to have life insurance coverage for their entire lives, even if they develop illnesses or injuries later in life. Final expense insurance is usually purchased by people over the age of 50 to cover their funeral and burial costs as well as some outstanding bills and debt they’ll leave behind when they pass away. With whole life policies, you can make payments or pay one lump sum. Policies in which you pay one lump sum up front are called single premium whole life policies. Single premium whole life insurance is usually recommended for older people who won’t need access to the money because the cash value is only paid out if youbecome terminally ill or when you pass away.
Term life is generally the most popular type of policy, possibly because it usually has a higher pay out than whole life insurance. There are many different things to consider when choosing a life insurance policy including your income, your savings, retirement plans, debt, your health, your job security, and more. It’s important that you speak with an insurance agent to make sure that you get a plan that meets all of your budget and coverage needs.
If you’re interested in a term life policy, check out our term life insurance page. We also have pages for child life insurance, final expense insurance, and single premium whole life insurance, so browse our website for more information on these whole life insurance policies.
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