When to buy Term Life Insurance or select Whole Life Insurance?
Life insurance is an important way for many people to provide income for their family when they can no longer provide a lifestyle the family is accustomed to receiving. Unfortunately this situation occurs when you or someone in your family becomes disabled or dies. There are important decisions you will need to make to select the best coverage meeting your family needs. Most common solutions include choosing between:
– Term life insurance policy – Death and disability benefit only
– Whole life insurance policy – Death and disability benefit while building Cash Value
– Variable Life – A Whole Life policy using investments to accelerate Cash Value
– Annuities –
Here is a closer look at some of the benefits and features of Term and Whole life forms of coverage and how a family can determine which type of policy will best suit their needs.
Term life insurance policies will generally last for anywhere from five to 20 years. It is a popular financial product for anyone that cannot afford a permanent policy or only needs coverage for a limited period of time. The final death benefit of a term policy is guaranteed, but these policies do not have a cash value. Policyholders can expect their premiums to increase at predetermined intervals such as once every five years.
A term policy is generally preferred when a family has high protection needs for a short period of time. This might include the years following the birth of a new child or after a major purchase such as a home. Some families also add term life insurance to their permanent policies for additional coverage for the bread winner during high-need years.
Permanent life insurance policies are comprehensive financial products designed for those that want extended protection. In addition to providing coverage up to age 120, these policies also accumulate cash value as long as the minimum premiums are paid. Some whole life insurance also provides the policyholder with the ability to earn dividends and take out loans against the policy.
Due to the benefits of permanent life insurance, insurance professionals often suggest that everyone takes a look at these policies before anything else. Permanent life insurance policies combine a number of unique features that will benefit the policyholder and their loved ones in the coming years. This begins with consistent premiums that will allow the policyholder to create a budget around their payments. After the policy’s cash value has been increased, the policyholder can then borrow against their life insurance to make a down payment on a home or pay for their child’s college tuition. As long as the premiums are paid, this type of insurance will remain in force.