Term Life vs Whole Life Insurance

Term Life vs Whole Life insurance is easy to understand once you know a few basics. Do not let the terminology intimidate your comparison – all you need to do is decide what amount of benefit you want. Either type can work well once you get the best quotes for rates that suit your needs.

The main difference between term life vs whole life is that term focus on a fixed death benefit. Term life insurance is the only form of “pure” life insurance, meaning that this policy gives you a death benefit.  Another difference is that you choosing a term life policy mean that there is a “term,” or period, that you have the insurance, typically 5 years, 10 years, 20 years, etc. This type of insurance only lasts the length of a fixed term.  The coverage expires with the term.  Of course, you can always renew this insurance at any time and the death benefit remains the same.

Once you renew, you have the option of level term life insurance, which the premium is directly proportional to you age but the death benefit stays the same, or decreasing term life insurance, in which the premium goes down with time but the death benefit also get smaller. Before benefits get too high, you can typically convert to universal life insurance, which accumulates cash interest that can be used to pay premiums or whole life so that any cash value can be paid off to your beneficiary along with the death benefit.

Whole life insurance is a cash value policy that combines insurance with future cash benefits. In the policy, there is a fixed amount of insurance that is paid out to the beneficiary in the event that the policyholder dies. In addition, the premium is allowed to accumulate in cash value that the holder can eventually borrow from or convert to cash. As a result, however, these plans have traditionally been a lot higher in cost.

By far, term life is known as a great form of burial life insurance to protect loved ones from financial burden of death. It can also be used for mortgage insurance to ensure a house will be paid off even if one of the mortgage holders dies unexpectedly. By comparing life coverage rates online, you can be ahead of the game and know what to expect every step of the way.

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