Term vs. Whole Life Insurance
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There’s nothing like having peace of mind knowing that you have the right life insurance policy in place.
Two of the most common types of life insurance that you should be aware of are term life and whole life insurance. Not sure how to differentiate between the two? Here’s how.
Term vs. Whole Life Insurance
Term life insurance only provides coverage for a specific period of time, such as 10, 20, or even 30 years. If the policyholder dies during this period, their beneficiaries receive a death benefit payout. Once the term ends, the policy expires, and there is no more coverage.
On the other hand, whole life insurance provides coverage for the entire lifetime, which means beneficiaries will receive a death benefit payout regardless of when the policyholder dies.
- Cheaper than whole life insurance
- Flexible coverage options
- Convertible to different insurance types
- Temporary coverage
- No cash value
- Premiums increase with age
As mentioned above, term life insurance is a less expensive type of insurance that covers the policyholder for a specific period of time.
It doesn’t have all the bells and whistles that whole life insurance has, but it’s a great way to give your family some financial protection in the event of an unexpected death, even if your budget may be quite limited.
Term life insurance is best for:
- Low-income earners. Term life insurance can be great for low-income earners who need protection for their dependents but cannot afford whole life insurance.
- Growing families. If you’re a new parent with young children who needs a way to provide for them in case of your death, term life insurance is a smart choice.
- Young adults with dependents. Younger people who are still starting out in life but that support their parents or family financially may benefit from a term life insurance policy.
- Lifelong coverage
- Fixed premiums for life
- Has a growing cash value
- Guaranteed death benefit
- Higher premiums
- Needs to be paid for life
- More complex than term life insurance
A type of permanent life insurance, this policy provides coverage for the policyholder’s entire life. It may also have additional savings or investment components.
Whole life insurance typically costs more than term life insurance, but it comes with the advantage of providing policyholders with a guaranteed death benefit as long as they continue paying their premiums.
Additionally, whole life insurance policies accumulate cash value over time, which can be loaned against or used to cover the policyholder’s premiums in the future.
Whole life insurance is best for:
- Family breadwinners. If you’re the sole earner in your family, it makes sense to get lifetime coverage in the event of your untimely death.
- Business partnerships. Individuals who own businesses with a partner can use whole life insurance to arrange buy-back policies for the shares of the business in the event of each other’s deaths.
- Families with estate values above tax exemption. Families can set up whole life insurance to help heirs pay for estate taxes in the event of their passing.
Magnum Insurance makes Life Insurance easy
Insurance should be easy, and with Magnum Insurance, it is. Get your online insurance done at your convenience now!
Flexible payment options including cash. Call, visit a store, or make a payment online by logging into your account.
Manage your policy. File and track a claim. Do it all with a few taps on your smartphone.
No one likes to file or manage a claim. That’s why we make the process easy with online forms and dedicated agents.
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