I am going to keep this simple. Let's start with Term Life.
Term Life Insurance covers you for the term you selected. The common term periods are 10-15-20-30 years. The premiums are usually guaranteed for the entire period of time. If you find a company that does not provide this guarantee, then I would shop around. Talk to your agent. After the term, the policy goes into what is referred to as annual renewable which can give you continued coverage however the rates are no longer guaranteed.
Whole Life Insurance is permanent insurance designed to provide death benefit coverage until you die, your entire life, whether that is tomorrow or at age 105. Not all companies are the same so be sure to do some homework. Whole Life Insurance is the oldest type of Life Insurance available and is usually the most expensive. Whole Life guarantees the premium you pay as well as the cash value you will have at a given time. Whole Life (WL), a true WL policy pays dividends which can go back into the policy for more death benefit & cash value are pay you direct. There are usually several add-on's or riders you can add to the policy to increase your coverage, add a child or spouse and on.
Depending on what you are trying to achieve with the Life Insurance, both Term Life & Whole Life may be the answer. I would recommend talking to your agent/broker to help you decide how each of these will fit.
There are several difference between Whole Life and Term Life Insurance. Put very simply, here are some:
1) Term life insurance lasts for a "term"; Whole life lasts for one's "whole life". These both depend on payments to last that long.
2) Term life insurance does not have cash value; Whole life insurance has cash value. Again, how the policy and payments are set up will determine the amount of cash value.
3) Term life insurance only protects against death; Whole life has options to use the policy while alive. There are some Term policies that now offer "living options", as well; however, Whole Life offers even more options than those.
President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
Let’s use the analogy of living in a home.
You basically have two choices: to buy, or to rent.
Suppose you rent. Why would you do that?
First of all, you don’t have to put any money up. Nor do you have to pay any real estate taxes. Nor do you have to pay for any maintenance.
It’s basically a cheap way to put a roof over your head.
But, you always have the option to buy.
Suppose now you buy. Why would you do that?
Equity. You have something to show for your money. Your home attains a monetary value that can be exploited.
Of course, it costs more. But you get more.
And you still get a roof over your head.
This model is useful for understanding life insurance.
Term insurance is like renting a home.
It’s a pretty cheap way to get the coverage you need. No equity, no added value.
But you can convert it to a permanent policy.
Whole life equates to buying a home.
You pay more, but you get more. There is cash available for you to use, in addition to the survivor benefit for your heirs - that roof over your head.
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Term Life Insurance covers you for the term you selected. The common term periods are 10-15-20-30 years. The premiums are usually guaranteed for the entire period of time. If you find a company that does not provide this guarantee, then I would shop around. Talk to your agent. After the term, the policy goes into what is referred to as annual renewable which can give you continued coverage however the rates are no longer guaranteed.
Whole Life Insurance is permanent insurance designed to provide death benefit coverage until you die, your entire life, whether that is tomorrow or at age 105. Not all companies are the same so be sure to do some homework. Whole Life Insurance is the oldest type of Life Insurance available and is usually the most expensive. Whole Life guarantees the premium you pay as well as the cash value you will have at a given time. Whole Life (WL), a true WL policy pays dividends which can go back into the policy for more death benefit & cash value are pay you direct. There are usually several add-on's or riders you can add to the policy to increase your coverage, add a child or spouse and on.
Depending on what you are trying to achieve with the Life Insurance, both Term Life & Whole Life may be the answer. I would recommend talking to your agent/broker to help you decide how each of these will fit.
1) Term life insurance lasts for a "term"; Whole life lasts for one's "whole life". These both depend on payments to last that long.
2) Term life insurance does not have cash value; Whole life insurance has cash value. Again, how the policy and payments are set up will determine the amount of cash value.
3) Term life insurance only protects against death; Whole life has options to use the policy while alive. There are some Term policies that now offer "living options", as well; however, Whole Life offers even more options than those.
You basically have two choices: to buy, or to rent.
Suppose you rent. Why would you do that?
First of all, you don’t have to put any money up. Nor do you have to pay any real estate taxes. Nor do you have to pay for any maintenance.
It’s basically a cheap way to put a roof over your head.
But, you always have the option to buy.
Suppose now you buy. Why would you do that?
Equity. You have something to show for your money. Your home attains a monetary value that can be exploited.
Of course, it costs more. But you get more.
And you still get a roof over your head.
This model is useful for understanding life insurance.
Term insurance is like renting a home.
It’s a pretty cheap way to get the coverage you need. No equity, no added value.
But you can convert it to a permanent policy.
Whole life equates to buying a home.
You pay more, but you get more. There is cash available for you to use, in addition to the survivor benefit for your heirs - that roof over your head.
Make sense?