Whole Life Insurance
What is term and whole life insurance? And what should we do to get the best benefit?
In whole life, there are a lot of advantages and there are only a few disadvantages. The advantage of whole life is that it’s never going to expire.
It’s the best kind of life insurance that there is. It’s never going to change in price and coverage assuming it’s a level policy,
They also accrue a cash value which should only ever be seen as an emergency fund.
If you pull out money out of the cash value in your whole life policy, that’s less money that will be for the death benefit so if it’s $20,000 whole life policy and you pull out $5,000, the death benefit is going to be roughly fifteen thousand dollars.
You can always pay that money back in and then it’s a twenty thousand dollar policy. That cash value is very handy if you have an emergency that comes up.
The main disadvantage of a whole life policy is that they are generally smaller policies between $5,000 and about $40,000 in coverage.
There are larger whole life policies but they’re more expensive. Still, you’re looking at a policy that’s never going to expire.
The insurance company is taking on a grand majority of the risk with whole life policies.
It’s a full coverage policy, so if the insurance company is going to do a larger policy, let’s say a hundred thousand or three hundred thousand dollars, it’s going to cost a lot more.
Term Life Insurance Policy
Term policies are usually larger coverage policies which make them very handy for things like mortgage protection in the event of a death.
It’s a great way to secure your family. They are great for even younger couples with kids. A term policy is going to be ideal, maybe, a larger policy like three, four, five hundred thousand dollar policy.
Even if it’s a two hundred thousand dollar policy, or something larger, if something happens, it can either pay off that mortgage or be money that’s going to be much needed in the event of a death.
If that income disappears not only is that going to make life a lot harder financially and otherwise, but when you lose a loved one, it makes decision-making almost impossible, so something like not being able to afford your bills is unbearable.
The downsides of term policies is that they do expire and there’s no cash value.
Most terms, not all, when they expire, you have to get reinsured and at that point term probably won’t be an option.
typically term policies are going to be 15, 20, 25, or 30-year policies, depending upon your age and depending upon what’s affordable.
The longer the term, the more expensive it’s going to be in terms of a monthly cost or an annual cost. There are exceptions to this that you can discuss with your agent.
These term policies are going to have some amazing living benefits built-in as well.
They’re designed for people that are younger and are looking to insure themselves, not permanently, but for a long period,
Twenty, 30 year policies could have living benefits built-in. If you have an issue with a disability, if you have a health problem, that’s significant something, these policies can pay somewhat or pay entirely while you are alive can be hugely helpful. Get that mortgage paid off while you are still around and still alive.
Make sure that you ask about that when you’re sitting down with a life insurance agent to get more information.
If you have more questions please reach out to us. We will be happy to help you. You can also call us directly at: (928) 323-0933.