When it comes to the type of life insurance you need, many people don’t understand which one they truly need: term life insurance or whole life insurance. Here’s what you should know about each in order to determine which type of life insurance fits your specific needs.
Term Life Insurance
Term life insurance policies only provide protection for a specific period of time. Whether it be required for 5 years, or 30 years, or until you reach a specific age, term life insurance only provides coverage for your death benefits if it occurred during your specified term.
For example, if you purchase a 15-year term insurance at the age of 50, and you pass at the age of 70, and you have not changed your term, your beneficiaries will not receive any of your benefits.
However, term life insurance policies do serve a variety of purposes. Term policies can provide substantial coverage, all at a minimal cost, allowing people with limited incomes to purchase more coverage than would otherwise be able to afford.
Whole Life Insurance
Whole life insurance provides protection for the entirety of an individual’s life. From the date the life insurance policy was issued, to when the insured individual dies, coverage will be provided and benefits will be paid to the beneficiaries. However, this is only the case when the policyholder had been paying their life insurance premiums up until their passing.
An added benefit of whole life insurance is that, in addition to a death benefit, it offers a cash surrender value. That value increases each year the policy is in effect. Once cash value has accumulated, it cannot be forfeited. This means that the insured can borrow a portion of the cash value, surrender the policy for its cash value, stop paying premiums and exchange it for a policy with a reduced death benefit, or exchange it for term life insurance.
Choosing between a term life insurance policy or a whole life insurance policy can be difficult. Be sure to consult with Brazelton Insurance Group today in order to help you decide which policy is best for your specific needs.