With loved ones relying on you financially, you want reassurance that they’ll be taken care of if something happens to you. Life insurance provides that security. This coverage comes in two forms: term and whole life coverage. The following guide highlights their differences so you can decide what is best for your situation.

Term

Term insurance offers coverage to an individual for a specific time frame. Most plans are available in increments ranging from 10 to 30 years. Usually, no medical exam is required to be eligible.

If the policyholder dies while the policy is in effect, their beneficiaries—such as a spouse or children—will receive a payout. While you may get the chance to renew coverage once that time frame is up, the fixed rate you had for the original contract may be reevaluated. 

Whole

With a whole life insurance plan, the policyholder also designates beneficiaries who will receive death benefits. However, it remains in effect for a lifetime, meaning that, as long as the policyholder pays the premium, the coverage does not expire—nor will their rates increase. Because of this extended time frame, a medical exam is usually required. 

This type of coverage may also offer annual dividends to policyholders. The dividends are not always guaranteed, but when issued, they can be used to lower your premiums.

Since the insurance company will have to pay your family at some point, policyholders are given the option to borrow against the value of their insurance plan during their life—though the provider may charge an administration fee for this convenience. The funds can be used for anything—including paying down debt or contributing to your child's college tuition. In this way, the insurance serves almost like a savings or retirement account. However, if the amount borrowed is not paid back in full, it can reduce the total amount of your death benefits. 

Losing a loved one is hard enough without added financial pressure. If you want to reduce this burden for your loved ones by purchasing a life insurance policy, turn to the team at Grachek Insurance. Founded in 1986 in Kalispell, MT, this independent agency will look at multiple providers to find you a policy that suits your needs and budget. Learn more about their available products online. Call (406) 755-4000 to request a free quote.