Deciding Between Whole Life And Term Insurance

While death can be an awkward thing to think about, it's a reality that you do need to plan for when it comes to your personal finances. Thankfully, there are life insurance policies that you can purchase to give your family financial stability after you pass away. Unfortunately, there is not a single "one size fits all" policy that can easily be recommended, since there are different options that can be better or worse depending on your need. The decision process starts at deciding between whole life and term insurance. These are the differences you should know.

Term Insurance

A term life insurance policy will only be offered over a defined time period. Depending on how long of a term you select, it will have an impact on your premiums. You don't have to worry about the premium of the policy changing since it is guaranteed for the entire term. The major factors that will determine your premiums are your health, age, family history, as well as lifestyle choices that you make. This includes drinking and smoking.

Since term insurance has a cheaper premium, it is ideal for those that do not want to pay a bunch of money, yet still want financial security if they pass away prematurely. This type of insurance is often used to help pay off big debts like a mortgage, or to give family members a nest egg if they do not have an emergency fund.

Whole Life Insurance

The benefit of having a whole life policy is that the beneficiaries have a guaranteed payment as long as the premiums on the policy are paid. Of course, this type of plan has substantially higher premiums, because the insurance often pays out to beneficiaries. The biggest factor that alters your premiums is how early you get the policy. Someone that is relatively young and healthy will get a much cheaper policy than someone that is older and ill.

Your whole life policy will also act as an emergency nest egg since you are able to borrow the money from it if you need to make a large purchase. Keep in mind, this can diminish your policies pay out if you do not pay back the money.

For more information about the differences between these two policies, speak to a local agent that specializes in life insurance. After asking you some questions, they can find the policy that best fits your needs. For more information, consider contacting companies like The Blondin Agency Inc - Nationwide Insurance.