What is the difference between whole life insurance and term life insurance? You've heard both of the industry terms, now let us explain.
Whole Life Insurance
Whole Life is the most basic type of permanent life insurance. Your premium will purchase a specific death benefit and produce a specific cash value, which are guaranteed for the life of the policy as long as the premiums are paid. Whole Life premiums are usually higher than term premiums, but are guaranteed not to increase. This type of insurance is great for people who want to ensure that they are covered for a lifetime, and like the idea of building cash value. Cash value is generally accessible in the form of a loan or a withdrawal during your lifetime.
Term Life Insurance
Term insurance, as the name implies, is coverage that is in place for a certain length of time, generally referred to as the “term period”. Typically, you can purchase it in term periods of 10, 15, 20, 25 or 30 years. Should you die before the end of the term period, your family, or beneficiaries, will receive the death benefit.