Term life insurance is my choice, should it be yours? We all know that life insurance is important, so it is a matter of choice which one is right for you. If you are young, healthy and expect to stay that way, term life insurance should be your choice. Does that mean, whole life insurance is out? No, but there are a few things to consider first.
Let’s start with some definitions. Term life insurance covers you for a fixed period of time (1-30 years) for a fixed amount of payments. If you stop making payments, the coverage stops! Whole life insurance is a life insurance policy that remains in force for the insured whole life and requires payments for the entire policy life. Term insurance is temporary where whole life is permanent. Term only has value if you die. Whole life has a cash value.
The main difference between the two policies is whole life insurance has an investment component. That is what creates a cash value. The advantage is you as the insured can borrow against that cash value to pay premiums. Whole life comes with higher sales commissions. It is not just for the first year either. Whole life is more expensive, but the payment will stay the same for your entire life. Should you buy whole life insurance? Do you have a family history that may affect your life or health?
Whole life may make more sense. Term life insurance is less expensive and you choose the length of coverage. The premiums stay the same for the period of time you choose. The premiums are lower and you can invest the difference yourself. After all, your insurance needs are different if you are in your twenties or near retirement. What do you think?
Whatever you choose, you should get a life insurance quote so you know how much it costs. Which one is right for you? It is up to you. There are a variety of life insurance solutions and you should investigate all of them. Life insurance is an important part of your over all financial plan. Do not ignore it. Term life insurance is my choice, what is yours?
Photo by: David Hilowitz
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