Life insurance is meant to be purchased to help your beneficiaries with any debt accrued at the time when you become ill or in the event of your death. Two of the biggest types of life insurance policies are whole life insurance and term life insurance. Each carry their pros and cons and either will be helpful if you should die.
Term life insurance is just like it sounds. The policy is set up different terms depending on how many years the policyholder needs the insurance for. This can be a period of one, five, ten, fifteen, twenty, or even thirty years. Term life insurance is ideal for those looking to have insurance for a temporary amount of time. The upside to term life insurance is that it can be renewed if the specified time period ends and coverage is still needed. Once your time ends and you no longer need or want insurance, it stops. It is really that simple. The downside to this type of life insurance is that your beneficiaries only receive a cash pay out from your death benefits if you die during the specified time range. There is no cash value with term life insurance.
Whole life insurance is known as Permanent, Standard, or Ordinary life insurance. These type of life insurance covers a policyholder’s lifetime, hence its name. It also has a cash value that is accrued over time while the policy is in effect. The death benefits and cash values are guaranteed, unlike term life insurance. There is no specified period of time that the coverage will cover. You can rest assured that you are covered for your entire lifetime. Premiums must be paid on time each month for full benefits of the policy to be used. This means that if you late or miss payments, your cash value will be non-existent and your coverage may lapse.
When it comes to choosing a life insurance policy, it all depends on what you want. If you would rather improvise and still have the option to renew your policy or stop the coverage, then a term life insurance policy will probably suit you the best. Term life insurance can be bought at a one, five, ten, fifteen, twenty, or even thirty-year policy, but it will not accrue any cash value. This type of policy is the least expensive of all life insurance policies. It is simply there in case you happen to die, and then your beneficiaries would be paid, only if you died during the policy time.
If you want permanent coverage and a cash value that grows with interest as you and your policy grows older, then whole life insurance would be for you. With whole life insurance, your premiums stay the same throughout your entire policy. This is the complete opposite of term life insurance. As you age, your premiums may raise too. With whole life insurance, you are covered for your entire lifetime. There is no need to renew or worry about having too. It is the most common of all life insurance policies.