What Is Whole Life Insurance?
Whole life insurance, or permanent life insurance, provides you with coverage for the entire span of your life. Though whole life tends to have higher premium payments than term life due to the duration of coverage and can be more complicated, it also offers more benefits. Premiums remain fixed for the length of your life and death benefits are guaranteed.
Whole life insurance also offers policyholders the opportunity to invest in the Policy Cash Value, allowing them to accumulate tax-deferred cash value through a savings component.
What Is Term Life Insurance?
As the name suggests, Term Life Insurance offers policyholders coverage for a certain period of time, anywhere from 10 to 30 years. This limited coverage means a lower premium rate than you would pay for Whole Life Insurance, and it remains fixed for the duration of the period you choose. After this period has ended, you may have to pay a much higher premium rate to continue your coverage. Term life insurance also lacks the cash value option available in whole life.
Term life insurance is the preferable choice if you are primarily concerned with protecting your dependents. If you die prematurely while paying term life insurance, your beneficiaries will receive a payment that can help them cover short-term debts and expenses, pay for educational endeavors, and compensate for the sudden loss of income.