Difference Between Term Life And Whole Life Insurance | Waterway Fin.

The Difference Between Term Life And Whole Life Insurance

Posted on April 2, 2014 by Chris Herath 0 Comments

One of the key factors in purchasing a life insurance policy is understanding the difference between term life and whole life insurance. Many people end up purchasing the wrong policy and are left with a policy which does not fill their needs, or they are paying too much for. One of the basic principles of life insurance is understand the difference between term life and whole life insurance. They both serve individual purposes at different points in your life, and you may even finding yourself needing both methods of life insurance protection. The way these policies are designed to perform, and the duration of each make them very different from each other.

The post will describe the basics of both term life and whole life insurance, cases when they should be used, and the advantages and disadvantages of each type of policy. Our goal at Waterway Financial Group is to educate consumers before they make their purchase so they can do it right the first time around. When someone does not know what they are buying they end up with wrong product and their family or business is not protected the way it should be with a properly designed life insurance plan. 

Basics Of Term Life And Whole Life Insurance

The basics of understanding the difference between term life and whole life insurance is to understand how each one works. Term life insurance is designed to be kept a certain amount of years, or more commonly referred to as the term of the policy. Term policies are designed to be temporary solutions which can range in duration from 1 year to 30 years. You can set the duration of the term when you apply for a policy based upon your needs whether they be short term or long term needs. At the end of the term your rates will skyrocket meaning the policy will be too expensive to be kept so most people will discontinue the policy at this point. Term life insurance does not have cash value building up in the policy like whole life insurance, as term life insurance is designed strictly for the death benefit.

Whole life insurance differs than term life insurance since it is a permanent life insurance policy. A permanent life insurance policy is designed to be kept the rest of your life regardless of how long you live. These policies will cost more of a premium since they are designed for the long term. They also have cash value which is money which can accumulate in the policy and can be accessed or used to pay up the policy so later in life you may not have to pay premiums. Whole life insurance is a more expensive product, but it does have its advantages.

Deciding Between Term Life And Whole Life Insurance

Most people initially have a hard time deciding between the difference between term life and whole life insurance in the beginning. However, when you ask yourself some questions you can get a better idea of which type of policy will work best for your situation. Some of the questions which will lead you to make a decision between the difference between term life and whole life insurance can include:

How long are you looking to keep the policy?

How much coverage do you need?

Are you willing to pay extra to accumulate cash value?

If you are looking for a policy which will last you the rest of your life than a whole life insurance policy could be your best option. If you are looking for a policy to cover a mortgage, debts, or to protect yourself while raising children than a term policy will be significantly cheaper and provide you with the coverage you need.

If you need a significant amount of coverage than term life insurance may keep your cost down. Typically whole life insurance policies are sold in lower face amounts due to the cost of these types of policies. However, term insurance allows you to get higher face amounts at lower premiums.

We mentioned earlier whole life insurance accumulates cash value which can have its advantages later in the policy. If you are not interested in the cash value accumulation than term is your best option.

Premium Difference Between Term Life And Whole Life Insurance

When shopping for life insurance we understand for most people it comes down to price. The best way to shop online is through a site like this who features an online quoting tool where you can compare the difference between term life and whole life insurance. This comparison can be done with just a few clicks. If you would like a more personalized quote outlining the difference between term life and whole life insurance please don't hesitate to give us a call. Filed Under: Life Insurance Prostate Cancer Life Insurance Sarcoidosis And Life Insurance

Difference Between Term Life And Whole Life Insurance | Waterway Fin.