When it’s time to purchase life insurance to protect your family, you should know the basic differences between term life insurance and whole life insurance. Here are a few essential facts you should know to understand the benefits of each plan:
Term vs. Life Insurance
The main difference between term and whole life insurance is the former is more simplistic, which involves paying regular premiums. The plan pays death benefits to your survivors if you die during the term.
One of the greatest benefits of term life is its low upfront cost. Large amounts of coverage can be purchased at affordable premiums. You can customize your policy according to your needs, such as paying off the mortgage or using it for your children’s higher education. This insurance can even provide temporary income for your family members. Matching your needs requires paying appropriate premiums.
A term policy can usually be converted to a whole policy if temporary income shifts to the long-term. Just remember term life is meant to provide benefits for a specific and limited time frame. After the term expires, the policy will likely shift toward a higher premium as it becomes renewable annually.
Whole Life Insurance
Another significant difference between term and whole life insurance is the latter makes funds available throughout your life. The cash value of the plan grows over time, as you can withdraw funds at any time. The policy provides lifetime coverage, and as long as it’s in effect at the time of your death, your beneficiaries will receive payouts.
Even though whole life insurance requires higher initial premiums, it guarantees cash value and pays earned dividends based on the interest rate. It’s a reliable and tangible investment that builds assets over time. This accrued equity can also be used to take out loans and withdrawals.
For your convenience, whole life insurance gives you premium options to allow for adjustments when needed. This form of estate planning is available for people of all economic classes. It ensures assets are handed down smoothly to the surviving loved ones.
Knowing the difference between term and whole life insurance can impact how much money you pay upfront and the amount you can withdraw. To learn more, contact the experts at Steve Wilk Insurance today. You may also visit our office at 310 S Main Street, Suite C, Lombard, IL 60148.