The game of life is absolutely buzzing. One moment you’re deciding on what stationery you want to buy for the first day of school, and a few years later, you’re making a very adult-like choice: Term vs. Whole Life Insurance.
The circle of life flows around very fast and we need to brace for both good times and bad. Life insurance is a policy to safeguard you from bad times. Death is the inevitable end, and it is nothing less than wise to prepare for it.
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Let’s say that you kick the bucket sometime in the future (because, the inevitable). Who’ll be there to take care of your family? Your heirlooms, assets and creditworthiness won’t pay the bills in your absence. When you leave the universe, you need to make sure your family is taken care of.
Life Insurance is a Must
The legal definition of insurance is all about many people pooling up resources to distribute huge risks in small fractions. It is a completely legitimate idea and millions of families still have a roof over their head because their sole-earner got an insurance policy.
Think about the last gift you can provide to your family. Wouldn’t it be awesome if you could provide them with the financial support that’ll ensure their good welfare?
No, we are not talking about going to Don Corleone and asking him to be The Godfather to your children. We’re talking something more assuring and profitable—an insurance policy that’ll guard your family by providing financial support, thanks to the policy you picked out.
Whatever might be your opinion for other things out there, don’t fall for the ‘life insurance is a sham’ mirage. Your children could get through college, your partner could be living a peaceful life and you’ll be at peace from the moment you’ll sign on those insurance papers knowing they are protected. Life insurance is buying peace of mind.
The Question is—Which One?
In most cases, we get lost in the world of life insurance policies—every other policy coming up with new names, new perks, BOGO offers and what not. Barring all that aside, insurance policies are pretty easy to pick out.
When it comes to life insurance policies and you getting yourself insured, you have two competitors ready to win your trust: term vs. whole life insurance. Now it is extremely crucial to understand what the difference between term and whole life insurance is before making a move.
When you are looking at both the options, do remember these two basic points:
- Term Life Insurance is for a specific term (generally a 10-30 year period) i.e. in case you die during the term; your beneficiary receives the policy benefit.
- Whole Life Insurance is a permanent life insurance policy to at least age 100 that also builds cash value in addition to the death benefit.
While many people believe that whole life insurance is the best bet, it can be quite costly. While the time factor plays a spoilsport for term life insurance, it is a commendable choice in many instances and also quite cost-effective.
So we are going to begin the term vs. whole life insurance debate in order to figure out what’s the premium choice between these two.
But first, Self-Introspect
Yes, these two types of life insurance are what you are going to decide between. What you have to do is consider a few factors before deciding on what insurance policy do you want:
Here are ten factors for you to consider before you make a choice between term vs. whole life insurance:
1. Your current age is the best factor to decide on a life insurance policy and the best place to self-introspect.
2. How’s your health? It’s life insurance policy we are talking about and your health would be a primary catalyst to the cost of the policy
3. What are your family’s financial needs? Make a list of all financial expenses that will turn up in both near future and far.
4. What about that one last rite? Your funeral and death plans will cost a lot of money and you don’t want to burden them on your folk’s right after you leave.
5. How old are the kids? Are your children going to pay for college on their own? That’s not a good idea and student debt is an epidemic. If they’re through college, decide on what you’ll leave for them.
6. How’s your family’s health? Would they be able to pay for health concerns in the long run? Tragedy and ailments might strike at any given time and you have to brace your family for it.
7. Your debt and mortgage. Life goes on, people come and go, but debt stays forever. Your insurance policy should be enough to cover the debt.
8. The retirement plan– your retirement strategy will have a direct impact on your life insurance policy. Look over your retirement plan and in case you don’t know how to, Blooom can do it for free.
9. Your family’s future needs should take the front seat. Don’t forget your children’s college education; you don’t want to hang them to dry.
10. What do you feel about the term policy? Are you picking a long enough term to meet your families needs?
Take note of these questions, write your answers down and you’ll have a good roadmap to choose your perfect insurance policy.
What’s the Difference between Term and Whole Life Insurance?
Now let’s get back to the real debate of term vs. whole life insurance. Let us compare both the types and then you can figure out what’s your way to go. We’ll also tell you about two life insurance connoisseurs from who you can request a quote to clear things out.
Term Life Insurance
As the name suggests, Term Life Insurance is where you are insured for a fixed time period. Now this time period goes up to 20 to 30 years. The term life insurance policy provides death benefits in case the insured person dies in that term.
Unlike a whole life insurance policy, which has huge premium amounts, the term insurance policy is cheaper and has a fixed premium amount. But there’s a catch—the policy has an expiration date, and once expired, one cannot reap benefits of term life insurance policy.
The risk a term life insurance policy carries is that you won’t get anything when it expires if you’re still alive. The premium you were paying won’t be returned, your insurance policy would expire (you can extend it, no doubt) and you’d be policy-less.
But that’s better than dying without a life insurance policy at all. Your family would be stuck in the middle of a financial turmoil and that’s not what you want to happen. Term life insurance might have an expiry date, but it gives you the much needed peace of mind at a reasonable cost.
Features
- Benefits are paid if the insured dies during policy’s term
- It’s the simplest and cheapest life insurance
- Terms can be renewed when the policy expires
- It can also be converted to whole life insurance
- One can use it as an additional layer of protection over a whole life insurance policy
Best Picks
1. Leap Life Insurance
Leap Life is not just another term life insurance company. In fact, it is the only company in the USA that offers online life insurance with multiple carriers on its back. Take insurance shopping to the next level, think no more than Leap Life.
A pioneer in getting you the best insurance quote, Leap Life will give you a term life policy of your dreams that’ll be fit to your needs.
Crafting your insurance policy couldn’t have been easier. Leap Life has this needs calculator which asks you all basic questions and voila! Your policy is right there in your hands. You can calculate how much amount you have to save for future needs.
Leap Life would give you tons of options from which you can take your pick. It’s the best place to compare your choices by requesting quotes. Give Leap Life a shot today!
2. Ladder
Term life insurance policies are all about selling whatever fits in their preset molds. But it’s not that tough to change the policy, and it’s a customer’s market. Ladder is one such life insurance expert that provides life insurance tailor-made to your needs.
We’re not talking about unnecessary fees and baseless pushy-sales; Ladder wants you to have what’s best for you. Sporting a coverage amount calculator, all you got to do is visit Ladder’s website and select your desired coverage amount.
Not only would you be provided with detailed estimates that you can go for, but you can also tweak the policy according to your convenience. Let’s put the term vs. whole life insurance debate aside for a moment, Life insurance is an intimate affair you want what’s best for your family.
The best way to get it is by going for a term life insurance that can be twisted to your convenience. Even if you want to make some changes later, Ladder would be more than happy to comply. That is why our best pick for term life insurance is Ladder.
Whole Life Insurance
This might sound like the simplest form of life insurance policy, but whole life insurance is way more complex. Yes, it is a policy that insures you for life and the worst thing that can happen is that you live forever. But there’s more to read than what’s written in the lines.
It is the policy’s cash value that matters when it comes to whole life insurance. This is not just an ‘all or nothing’ policy, as whole life insurance keeps on growing every passing year. It is an investment because the cash value grows nice and easy.
The best part is that you won’t have to pay taxes on this policy. The income for policy’s cash value (which keeps on escalating with due course of time) is tax-deferred. So not only are you growing money with afflux of time, you don’t have to pay taxes on gains.
But a whole life insurance policy comes with twists and turns. For a start, it costs more than a term life insurance policy. If anything, it is good for the insured party, as s/he’ll be receiving insurance amount for sure. With the rising cash value, the policy will bear results in the long run.
Features
- It’s an insurance policy that lasts the whole lifetime
- Apart from death benefits, there’s a cash value accumulation which your family can make the most of.
- As whole life insurance policy scams are on the rise, a health examination is must in order to qualify.
- But there’s an easy way out—one can proceed to purchase a whole life insurance policy without a health exam by paying higher costs.
- The policy’s cash value builds up in 12 to 15 years—a time which would be easy to attain as it is for the whole life.
- Cash value can prove to be helpful too—some portion of the amount can also be withdrawn from insurance policy during a lifetime.
- Come to think of it, it’s cheaper than a term insurance policy if you consider the policy amount in comparison to term.
Best Pick
MassMutual Life Insurance
We might or might not be able to solve the term vs. whole life insurance debate, but MassMutual life insurance surely tips the scales in whole life insurance’s favor. Whole life insurance policies are all about ones that offer the best cash policy value and MassMutual wins that race.
MassMutual life insurance policy also offers a distinct source of income i.e. policy dividends. You can pocket annual cash dividends which increases the policy cover. You can easily apply for whole life insurance online and your policy would be in effect in no time.
Choose an insurance fit for your needs as they also offer retirement insurance, disability insurance and college funds assistance for your kids. Give a visit to MassMutual’s website and learn more about their policy terms.
In the End, there are no fixed Cookie Moulds
Life insurance involves a hefty chunk of money, money that you will gather for your family’s future well-being. Don’t just invest it in that one which has a better salesman, compare both options and find the best way to differentiate between the two.
Whichever policy offers you better benefits, benefits that suit you, go for it. But keep in mind that in term vs. whole life insurance fiasco, there are more than two simple factors in play.
