Deciding between term and whole life might seem like an easy decision but you’ll want to take a look at all of the details since it means securing your family’s future in the event of your untimely death. Now, you want the option that will guarantee a payout, but whole life insurance doesn’t always work out that way and it can make more of a hassle for your loved ones than anything else. The concept between term and whole life is that term only covers a “term” of your life such s 15, 20, or 30 years at a time. Term life insurance protects a person for a preset number of years, while whole life is exactly what it seems; it covers you forever.
Easier to Accommodate Payment
Most people in their twenties or thirties can get term life insurance for less than their phone bill monthly. Not only is term affordable, but it also guarantees that if anything does happen to you prematurely, your family will have enough to settle the funeral expenses, pay off your outstanding bills, and hold themselves over to take on their new lifestyle.
Static Premium Rates
Term life insurance will often come with a flat monthly rate that shouldn’t change for the entirety of your plan. That means if you have a thirty-year plan, that you’ll pay at thirty, even when you’re sixty. Typically, these plans also come with a low premium making it easy for someone to get started. The static premium rate is great for families that aren’t sure of what is in their future when it comes to finances.
Fit for Families
The greatest portion of people using term life have families. They are planning to lose a source of income and have a period of grieving for a key person in their family unit if the worst were to happen. Many families don’t plan on needing whole life and would rather invest their money into other avenues. Although whole life does offer some advantages in cash value growth, you can surely make educated investment decisions that would dwarf the growth of a policy over the course of thirty years. People often choose to go with their own investment strategies rather than watch a whole fund grow with each monthly payment.
Solution for Special Situations
Whole of life insurance plans almost always require health examinations before the policy will start. However, most term life plans do not. They may ask questions about whether you have a terminal illness, but aside from impending or immediate deadly conditions, there is no disclosure. Another special situation that comes up is debt. If you’re living with debt, the last thing you want to do is to leave your spouse in debt and widowed at a young age. A term life policy will help your spouse recover mentally and financially.
Young deaths are almost always unexpected, but when a special circumstance arrives where you could foresee the likely need for a life insurance policy, you should aim for the lower cost option that caters to your special circumstances.