Term Life Insurance vs Whole Life Insurance

Posted on by Kate

If you are considering life insurance for the first time, the type of insurance coverage you need and the insurance coverage you want may depend on several factors. Affordability is the primary question most people consider before the type of coverage they want.  Indeed, the type of coverage you get may very well depend on what you can afford.

Term Life Insurance

Term life insurance is coverage that is set at a specific fee for a specific time frame. After the term expires, new terms and a new price may need to be re-negotiated. Typically, term life insurance coverage is used for high-risk years – such as for children, while you have a high-risk job or if you are medically unstable. This type of coverage is useful as a short term type of insurance but more often used for death benefits. Term life insurance premiums tend to be more affordable and can usually be renewed yearly at similar rates.

Whole Life Insurance

Whole life insurance is coverage that lasts the entire life of the person covered. The significant difference between whole and term insurance is that whole insurance benefits are much higher in return. However, this also means higher premiums. The idea of whole life insurance is that term life policy holders felt that after 20 or 30 years of paying insurance premiums they should have something to show for it. Whole life insurance policies have an actual cash value – every premium payment reduces the the net amount of the policy – and therefore the risk is reduced as well.

There are many different types of whole and term insurance. When  you are doing research on the kind of coverage you and your family needs, make sure to ask for term life insurance quotes. Nearly every insurance company can give you a life insurance quote, even if you are just browsing online.