Life insurance doesn’t always last for your whole life. For some individuals, it could last for a specified period, perhaps 10 or 15 years. That type of policy is referred to as “term” life insurance. So how is it different from whole life insurance?
Life insurance policies that stay in effect for your entire lifetime are called “whole” life insurance policies. As long as you continue paying premiums, you have insurance until you die.
On the other hand, there are term life insurance policies. These policies provide coverage for a limited period of time. If you choose a 15-year term, for example, the insurance company will pay your beneficiary the death benefit if you die during the next 15 years.
The type of policy that is best for you depends on your needs. Whole life policies generally work well for people who want to take care of spouses or dependents if they die, even if their beneficiaries’ circumstances change. But people whose beneficiaries will only need financial support for a limited period of time may prefer term life insurance policies.
Let’s say you have coverage primarily for your children, and you expect your children to grow up and provide for themselves. If this happens, you may not need life insurance anymore, and a term life policy may be a good choice because it probably costs less than a whole life policy.
Generally, the longer the term, the higher the cost. But you should consider other factors when choosing between a whole and term policy, such as reinsurability. If you fall ill during the term of a policy and want a new policy, it may be hard to get one.
Let us help you navigate what’s best for you. Please call or email us if you want to better understand your life insurance options.