What is the difference between term life insurance and whole life insurance?

Term insurance 

is life insurance that is going to terminate. It last only for a certain amount of time. 

Typical, it is bought with the idea of covering short-term or temporary Obligations, such as income replacement for those who have young dependents or are caring for older adults. It is also a great tool to cover your mortgage if something should happen to you. Some expenses will not last forever. However, they still need to be covered. 

A rider is an add-on to the base of the policy, which allows some enchantments. For example, you can add a Critical illness rider or a child rider to allow a small death benefit for them. 

Term insurance length of coverage can vary from 10, 20, 30 and many times.  

For those married or common law, you can also layer the two policies together, which can help lower overall costs.

All of that generally depends on what are your goals and needs.

Term life insurance Premiums and Death benefit coverage generally remain level during the term. At the end of the term, there is often an option to continue the term, but the premiums will significantly increase, and many policies have the option to be able to change to Whole life insurance. 

So now let’s talk about Whole life insurance.

Whole life insurance is permanent coverage.  

There is no term to it as it lasts your entire life.  The payments can last for life, or the payments can last for specific numbers of years like 8, or 10 or 20 years. At which point the insurance is paid up, and you will have coverage for your life.

Whole life policies will have a cash value account connected to the plan. That cash value can be used for several things. That we can talk about another time. 

So the question becomes, why would one buy Whole life insurance. 

Why would one buy Whole life insurance? 

It is generally purchased to help protect against permanent obligations.

For example,

• funeral-related expenses. 
• Final Expenses
  • Want to leave a legacy to a grandchild, child or spouse.
  • Estate taxes and debts that are experienced due to your death.
• Retirement planning – this is where one would use the cash value of a whole life policy to fund some retirement life.
• Businesses who have obligations, for example, buy-sell agreements or costs due to death.
• One could also use the cash value to secure loans for several reasons that may come up.

Another significant factor that is different between Term and Whole life insurance is the cost. Simply put, the term is cheaper; that is the bottom line. But it will end at some point. So we need to understand your needs and wants.

Factors to consider when choosing Whole life or term?

1)What are your Goals?

What is the purpose of life insurance? Where are you at in your career and season of life? If you were to die, what are the problems that would come up as a result of your death? Then how could term or whole life help with that?

2)Match the product with your goals?

Once you know where you want to go, make sure you pick the product that matches that goal. I have seen life insurance policies that do not match the individual’s objectives and needs. 

3)Make sure you can easily afford the premium. Many in this industry have sold policies to people they do not need or can afford. 

If that is you, I am sorry about that.  

This is why it is essential to work with someone like myself who will shop for you and look at different carries out there to bring a cost that you can afford and best reach your needs and goals. 

4)Something is better than nothing. You may think all I can afford is this, then get that because anything will help.

 I had someone who could not afford much, and they just wanted to make sure their family had money to cover the cost of funeral costs and expenses resulting from their death. So we found one that fit that need. 

We all would love to have the big death benefit, but we something is better than nothing. Buy what you can.

5)Health and age will affect your Coverage – It is better to get it when you are younger and in better health. So get it in place today.  

What do you do now?

If, after watching this, you want to learn more or think you need to get this figured out or review what you have. I am offering my services; at experior.  

We start with a financial analysis that looks at the whole picture to help create a financial plan and get you insurance that meets those needs and goals.

So there are two next steps.

1. Watch another video or learn more.
2. Book some time with me, and to do that, you can go to matthewlaker.com/booking and set up a time. We can connect over zoom, and I can get to know your story more and see how I can help you in this area.