Whole Life Insurance vs. Term Life Insurance

Whole Life Insurance (Permanent Insurance) is just that – permanent. Providing premiums are paid, the coverage last a lifetime. In additional to the death benefit, permanent policies also accumulate cash value on a tax-deferred basis* and that value can be used to supplement your retirement income or help provide for a child’s education. In the analogy of buying a house or renting an apartment, permanent insurance is like buying a house; that is why it is more expensive than term insurance. You own it until you die or it matures. If you want insurance to pay a death benefit to your family or loved ones, then permanent insurance is one of the safest ways of doing it. Mortality tables suggest that most people will live well into their 70s and many to age 80 and beyond. Permanent insurance takes the guesswork out of the equation.

*Check with your tax advisor on any taxes or penalty due upon withdrawal

Term Insurance is commonly referred to as temporary coverage. It is typically purchased for a specific time period, such as 5, 10, 15, 20 of 30 years and is often used to help protect mortgages or pay benefits to family in the event of an untimely death. Term insurance is usually less expensive than permanent insurance because insurance companies charge premiums based upon the likelihood of your death. For example, if you are age 30 and buy a 20 year term plan, the likelihood of your dying between the ages of 30 and 50 is relatively small. If your term plans runs out (you reach the end of the number of years your plan goes to – such as 20 years) , you must re-qualify for coverage based upon current age and health conditions; thus term insurance will become more expensive to re-qualify the older you get.

Life insurance is a financial resource for your loved ones in the event of your death. You pay an insurance premium, and in return, the insurance company pays your beneficiaries the death benefit.

Even if you have life insurance, keep in mind that life changes and so does your need for protection. Review your life insurance needs every few years.

Please contact one of our insurance professionals at 1-800-254-2327 for help in determining which plan fits your needs and budget.