A life insurance policy protects your family from potentially devastating financial costs when you pass away. Most life insurance policies fall into one of two policies: term insurance or whole life insurance. Choosing the right type of life insurance for your and your family’s needs can ultimately help your family’s financial security.
Selecting your life insurance may seem daunting, but we’re here to help. Contact The Peterson Agency to learn more.
What Is Term Life Insurance?
Term life insurance provides coverage for a set amount of time. It will only provide your beneficiaries with a death benefit if you die while the policy is in place. These policies have a finite duration and are generally considered the easier to understand and less expensive of the two types of insurance.
What Is Whole Life Insurance?
Whole life insurance is a permanent life insurance policy. As long as you continue to make premium payments, your whole life insurance policy will never expire. In addition to providing death benefits, a whole life insurance policy allows you to build up cash value, which can be borrowed against, withdrawn or used to pay future premiums.
Another perk of a whole life insurance policy is that it offers a level premium, which keeps your monthly payments at a set rate; this front-loads the cost of your policy. Plus, if you get a whole life insurance policy while you’re relatively young and healthy, you’ll be locked in at a set premium. In comparison, if you have a term life policy that expires in 15 years, you’ll likely have to pay a higher premium upon renewal than if you purchased a whole life policy.
The primary disadvantage of a whole life insurance policy is the cost. Typically, these policies are much more expensive than a term life insurance policy. Additionally, the cash value you can withdraw is directly tied to your death benefits. Therefore, if you withdraw a significant amount of money from your policy, your death benefits will also decrease.
Finding the Right Life Insurance
When it comes to selecting the right life insurance policy for your needs, don’t go through it alone. We’re here to help you understand all of your options. Call The Peterson Agency to learn more about our coverage solutions.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.