Life Insurance 101 – Term versus Whole Life
Over the next few months we’ll be going in depth discussing life insurance and how it can work for you & your families to create wealth, plan for retirement, build a college fund, and leave a legacy. There are two major types of life insurance – term life and whole life. These types have different uses, as Benefit Concepts agent Jay Cohen explains below:
Do I need term or whole life insurance? That question is answered differently for each person. At any given point you may need term insurance or whole life insurance, or both. With good planning and regular reviews of your insurance you can be prepared for your different needs at different points in your life.
Term insurance is like leasing a car. You buy a specific amount of insurance for a set period of time. And just like leasing a car, term insurance costs less than whole life insurance. Also, just like with car leasing, when the term expires – you have no insurance. But, both types of insurance have their place in your life, and term life insurance can be excellent protection if you choose your plan wisely and understand what you are buying.
The key purpose of term insurance is to cover a specific need such as replacing income, paying off a mortgage, or college tuition in case of death. It can also be used in business to allow partners to buy out a deceased partner’s interest in a business, or to replace key employees in the case of their untimely demise. There are many ways to structure term insurance to suit your individual needs without breaking the bank.
For most people, whole life insurance is a permanent policy meant to cover final expenses. Final expenses include not only funeral costs but medical expenses, inheritance taxes and to leave a legacy to loved ones. It is more expensive than term insurance, but does not expire and has additional benefits. Whole life insurance builds up cash value that can borrowed against in the case of financial emergency (without regard to your credit) and in some cases pays dividends that can be used to increase the amount of insurance, or lower the payment due for the insurance. It may also have accelerated benefits, meaning you may be able to draw cash from the policy to cover healthcare expenses if faced with a grave disease. There are several types of whole life insurance and we will delve into them in a separate post.
So how do you know which type of insurance you need and how much you need? Sit down with one of our professional advisors for your free insurance needs assessment. We can look at your current financial situation & goals and make recommendations, review any existing coverage, work up quotes and make applying for coverage quick and easy. We have several companies with which to place your insurance, taking advantage of the best rates for your particular situation.
Call now for your free, no obligation quotes or to set up an in depth consultation – 800-433-0553