No two families are exactly alike, which is why life insurance companies offer a wide range of policy options, any of which might be suited for your situation. While the sheer variety can be overwhelming and confusing, all of these policies can be divided into two basic categories: term and whole life insurance. Understanding the different is the first step toward choosing the best policy to protect those who matter most.
The Difference Between Term & Whole Life Coverage
Term Life Insurance
A term life insurance policy pays benefits if the policyholder passes away within a certain time frame. These options are ideal for those whose financial responsibilities will likely change over time. For instance, new parents often purchase 25-year policies, which typically provide financial protection until their children are grown and building lives of their own.
Once the term expires, you may decide to let coverage lapse or renew the policy, probably at a higher rate. Because you don’t get any of the premiums you’ve paid back if the policy expires, term life insurance is typically the most affordable option.
Whole Life Insurance
Unlike term policies, whole life insurance never expires, so your loved ones will receive benefits no matter when you pass away. They also contain an investment component, which allows you to withdraw funds or take out loans against the value of the policy to cover major expenses.
Insurers offer a variety of whole life insurance plans, each with their own approach to investing and rules about calculating premiums. Some are tied to money market accounts, while others are designed for investors with higher risk tolerance. Because the distinctions between these policies can be complex, it’s best to speak with an agent before selecting a whole life insurance plan.
Since 1992, the agents at Quinn Agency, LLC have helped families throughout Meadville, PA protect themselves from the unexpected. As an independent agency, they work with some of the industry’s leading providers, giving them an almost limitless variety of policies to choose from. Visit their website to learn more about their life insurance products, or call (814) 337-2766 to request your free quote today.