Term or Whole Life?
Going into 2020 you may be deciding if you need to purchase a life insurance policy. The age-old debate is do you buy Term insurance or Whole Life? In this article, we will compare your options.
Fortunately, it is very easy to find information on this topic and begin to request quotes for both term insurance and whole life. If you are ready to start getting quotes then click below and you can start to compare options in 2 mins!
There’s no denying the fact that both types of policy have benefits and drawbacks. You will ultimately compare the pros and cons, and decide on the best fit will be for you and your loved ones.
When you are comparing term or whole life you will want to look for a convertible term. This type of term insurance will give you the option to change it to whole life if you want to in the future. This becomes the best of both options. You can lock in your coverage with a good company at a young age and then decide on whole life insurance later.
Ultimately The Best Life Insurance Is In-Force Insurance
What do I mean by this? With so much information available analysis paralysis can set in and you never actually get covered. If you are researching for a term or whole life and currently do not have any life insurance in place we strongly recommend locking in a cheap term policy during your research.
From our experience, after a family member dies, a family never seems to care if they if the policy was term or whole life.
The best kind of life insurance to have is life insurance that is in force when someone dies.
Questions to Answer when deciding Term or Whole Life
By addressing the following questions, you’ll find it much easier to purchase term or whole life.
What does your budget look like?
Do you track your budget? Are you in a position where you can afford to put away $150 – 300 towards a life insurance policy each month? Whole lie premiums can very easily be several hundred dollars each month.
If the budget is tight or you have a lot of debt you are most likely shopping based on price alone. If you do not take anything else into consideration between term or whole life, you’ll find that term life insurance is more affordable and a better financial option.
Of course, there are several tradeoffs to take into consideration. For example, you may be able to save money now, but your policy will expire at some point in the future. When this happens, you’ll be older, which means purchasing another policy will cost more.
Are you interested in lifelong coverage?
Some people are okay with the idea that their policy only provides coverage for a particular period of time, such as 10, 15, 20, or 30 years. Term insurance is going to be temporary coverage and that’s it. Think of it as if you are renting the insurance for a specific period of time.
Others, however, don’t see the point in this. Instead, they realize the benefits associated with a whole life policy. Think of buying whole life similar to buying a home. The cost of buying a home is more than renting but the person who buys the home owns the asset in the future and becomes a part of their financial plan.
Just remember whole life requires a commitment to pay your premium in full every year, so your policy will remain in effect.
You Could Go For A Universal
In reality, there are other options apart from term or whole life. There is a type of insurance called Universal, and it may be the most diverse kind. You can do a fixed, variable, guaranteed and many more options exist. Universal Life is a great choice for people looking to get life insurance that last forever.
We get many requests from clients that think they want whole life insurance. However, after digging a little deeper we often find that Universal is a better choice for many clients.
If you do not care to have cash values that are a part of a whole life plan than universal life is a great option. This type of policy is going to provide you with lifetime coverage at a much more affordable price.
Are you excited about the idea of your life insurance policy doubling as an investment?
With whole life insurance, you have to think long and hard about how this could improve your financial situation.
Many whole life insurance policies accumulate cash value as the years go by. Furthermore, depending on the company, you may be eligible for annual dividends. With term life insurance, this never comes into play.
In reality, whole life insurance is best suited for someone who is looking to save money in a tax-advantaged account at 3-5%.
With this in mind, you may soon find that paying more for whole life insurance is well worth it.
Do you want to take loans from your policy?
This is something that many people overlook when purchasing life insurance.
With whole life coverage, you may have the option to take out a loan against the policy’s cash value. It’s not something that everyone does, but it’s good to have the option.
If you want the option to take loans from your life insurance forget term it will not afford this opportunity.
In reality, many people haven’t thought of using their life insurance as a savings vehicle. Learn more about how you can use your whole life policy.
Do you want to get multiple quotes?
Unfortunately, there are many myths associated with the life insurance industry. One of the most common is that it’s easier to purchase a term life insurance policy because more companies offer this coverage.
It doesn’t matter what type of policy you’re seeking term or whole life, you’ll find many companies, both big and small, offering what you’re looking for.
Generally speaking, you won’t have any trouble securing five or more quotes, all from companies with a good reputation and excelling ratings.
As noted above, ultimately the best type of life insurance is the policy that is in force when you die. This can happen unexpectedly don’t delay locking in coverage. Regardless if you go with term or whole life this purchase is based largely on your personal preference, objectives, family situation, and finances.
If you’re comparing term and whole life policies, answer the five questions above. So you’ll find yourself moving in the right direction and in a position to make an informed and confident purchase.