What Makes Term Life Insurance Different From Whole Life Insurance?

Life insurance is a policy that allows you to protect your family and loved ones by paying a premium to a company that will pay out a benefit amount to your beneficiaries when you pass away. There are essentially two broad categories of life insurance policies; term life insurance policies and whole life insurance policies or universal life insurance policies.

Term life insurance policies are essentially exactly what the name implies – a policy that is valid only during a specific duration or period of time. Whole life insurance policies on the other hand are policies that last for the duration of the insured’s life. There are a number of differences that set term life insurance apart from whole life insurance.

How Term Life Insurance Rates and Whole Life Insurance Rates are Different.

Because term life insurance plans are put into effect with a structured beginning and a pre determined end, they tend to be a lot cheaper than whole life insurance when it comes to premiums and term life insurance rates. This is because when it comes to whole life insurance, the insured is eventually going to receive the payout, but with term life insurance there is a chance that the period will end before the payout is required. If you live through the period that you are covered under your term life insurance rates, then the insurance company is not required to pay anything out, but they have gained all of the premiums that you have paid over time.

What Term Life Insurance Companies Offer That Whole Life Insurance Companies Do Not

Another very large distinction that exists between whole life insurance and term life insurance is the fact that at the end of the policy’s term, the policy holder has nothing to show for the premiums that have been paid over time. On the other hand, when it comes to a whole life insurance policy, the insurer often takes a portion of the premium and allows it to be placed in a savings account so that the whole life policy holder can access this money in the event of an emergency. Of course, the monthly premiums associated with whole life insurance policies tend to be a lot higher to reciprocate for these extra benefits.

Determining whether to purchase term life insurance or whole life insurance should not be a difficult decision to make. The best way to answer this question is to figure out first why you need to become insured in the first place. Are you seeking life insurance because you have young children and you want to protect them in the event of your death? Are you insuring yourself because you are working in a dangerous industry and want to protect yourself and your family? These are both excellent reasons to seek out term life insurance with a policy that lasts thirty years. This way, for thirty years you will be protected.

If you can find a term life insurance policy that offers the coverage that you need, and still pays out even at the end of the term, then you have found a winner of a term life insurance plan. Make sure to explore different term life insurance rates when you are looking for insurance, so you can find the right type of term life insurance for your individual needs, offering the coverage and the services that you require to protect your family members and other loved ones.