Life insurance can be a helpful resource in planning for one's family and future. But which kind is right for you?
There are many kinds - Whole, Term, Universal, Guaranteed; and some even require special licensing of your insurance professional.
Let's simplify the basics of life insurance: Whole life insurance is like a home you own; while Term life insurance is like an apartment or flat you rent for a time.
Whole Life Pros
- It is permanent - once you have a whole life plan in force and consistently pay premiums, the policy can last for your entire lifetime.
- Most plans offer a "cash value option" which behaves like a savings account; as premiums are paid, a portion is placed toward the cash value. The cash value usually starts a couple of years after the policy is started, and grows much like a bank savings account.
- You can take a loan out against your cash value.*
- Your death benefit and premium remains the same over your lifetime. (One item to note -- is after not smoking for 12+ months, you may be eligible to change from smoker to non-smoker as long as your health has not declined.)
- Some plans offer coverage for people with diabetes or other hard-to-place health issues.
- The younger you are, the less expensive the cost of life insurance. (Many companies write life insurance policies on infants!)
Term Life Pros
- It offers life insurance with level premiums (premiums that do not increase) for a temporary time span. (To protect home mortgage(s); young families with/without children.)
- You may be eligible for a higher death benefit protection.
- Easy to understand.
Whole Life Cons
- *If you take a loan against your cash value and do not pay it back prior to your death, your death benefits will be reduced by the outstanding loan balance.
- Depending on the plan, you may not have a choice where the life insurance company invests your cash value.
- Your budget may not allow for high death benefits, like $1,000,000 dollars; a revisit/ or re-analysis of your life insurance needs may be required.
- The older you are, the more expensive the cost of life insurance.
- Many companies have a maximum age to be eligible for life insurance.
Term Life Cons
- Determining how long of a term (10, 15, 20, or 30 years) you will need the life insurance. (If we could see into the future, this would be considerably easier to determine!)
- Once a policy term expires, there is no option to "renew" coverage. (Depending on the type of term insurance plan, there may be an opportunity to continue the policy plan as a non-level term policy, however the annual premium can significantly increase year after year.)
- There is no cash value option; no saving account feature within a term insurance plan.
Let Us Help!
There are pros and cons to most everything we come in contact with, including life insurance. Determining which plan or a combination of both plans is best for you can be quite easy, simply by working with a licensed life insurance agent.
With Consultative Insurance Group, we work with you to determine a plan that works for you, your family, and your future. Give us a call, drop by one of our office locations or complete an "I want a Consultation" option to schedule an in-person or virtual appointment with one of our life insurance sales associates.