Comparing Your Life Insurance Options
Almost everyone eventually comes to the point where they realize that they need life insurance. For many, that moment arrives when they get married and finally start a family. For others, it happens when they start building a business and accumulating assets that they want to protect.
After you’ve established the need, you next must decide on the type of life insurance product you need. The two most common types of life insurance products are term life insurance and whole life insurance. They both have their advantages as well as their relative disadvantage (compared to the other).
Both types of insurance policies are meant to provide security for your family and beneficiaries in case of your death. Both types of insurance policies can pay off your existing home mortgage, create an education fund for your children and provide much-needed income after you’re gone.
But these two insurance plans do it in slightly different ways.
Affordable Term Life Insurance
A term life provides benefits only if you die during the specified period. The benefits expire when your term ends.
Also, the premiums you pay into your term life insurance policy does not accrue any face value. In other words, if you outlive your term life insurance policy, all the money you paid into it are kept by the insurance company.
Even though that may seem like a disadvantage, term life insurance does offer one important benefit while you’re alive and covered by the policy: lower premiums. Term life insurance tend to have lower premiums as compared to whole life policies.
The shorter the period of your selected term life policy, the lower the premiums. Common term life insurance policies may run for only five to ten years. However, some term policies can reach up to thirty years. But that assumes that you continue to maintain your premium payments.
Short-term policies, although cheaper, do tend to decrease your death benefit over time. This means that if your family no longer depends on your income, then the short term insurance would be a better choice, because they will still be able to sustain themselves even if the term period expires.
Investing with Whole Life Insurance
You also get a death benefit with whole life insurance policies. But the premiums are usually much higher on whole life policy (compared to a term life plan). That is because the whole life insurance policy uses some of that extra premium to increase the face value of your life insurance policy.
Eventually, you can cash in your whole life insurance policy to help with emergencies or even your retirement. In fact, many individuals incorporate a whole life insurance policy into their long-term financial planning.
Some whole life plans can accrue so much face value over time that the dividends will be enough to pay the life insurance premiums, so that you’ll have that coverage forever.
Choosing the right insurance policy for you can be confusing. The good news is that you’re not alone. At Critical Illness Policies, we can help you explore your best options and tailor a plan to meet your needs. Call us now at 1-561-210-5822, and speak to our experienced and helpful agents to get the answers you deserve.