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What is best for me? Whole Life VS Term Insurance

The decision to purchase whole life insurance rather than term insurance is a personal choice and depends upon your finances, age, health and goals for your future to achieve.

Whole life policies cost significantly more than term insurance policies for the same amount of coverage. Although that cost is guaranteed to remain level, your main concern should be with having adequate coverage when you need it.

The term insurance policies seems cheaper to buy, but the consumer will end up paying lot of premium. If someone purchased a term insurance policy to cover a certain amount of time and would not need to renew the term, that is a perfect insurance plan for that person.

If you keep the term policy and wish to renew it again and again, that will not be a good idea. Once your term insurance is renewed for the next term, most of the times the premium increases rapidly. The more you grow older, the more premium you have to pay.

Once you have the whole life coverage in place. It cannot be revoked, reduced or cancelled by the insurance company except in cases of non-payment or fraud. This makes whole life insurance appealing because it provides a degree of certainty. The advantage of permanent insurance is that your health at the time the policy is issued will dictate the terms of your insurance for the rest of your life.

Here are some advantages of whole life insurance:

  • Protection for life – Whole life plan will never expire or go down in value.
  • Level Premiums – The rate you pay for your policy will never increase.
  • Cash Value – A portion of your premium builds cash value which can be borrowed if needed.
  • Guaranteed Death Benefit – The amount your beneficiary receive is guaranteed.

The Bottom Line

The decision of whether or not to buy whole life insurance should be made with regard to the future of both your financial and physical health. There is no point in acquiring life insurance if it will not support your loved ones when they need it the most.

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