Many life insurance providers offer two policy types: term life insurance and whole life insurance. When shopping for suitable coverage, you might wonder which you should purchase. Our knowledgeable team at Medical Profiles Inc. defines and differentiates the two.
How Do Term Life Insurance and Whole Life Insurance Differ?
Term life covers the policyholder for a predetermined amount of time. You can purchase a policy that lasts ten, 20, or 30 years. You can name beneficiaries who will receive the death benefit if you pass away within the specified term.
As the name implies, whole-life policies offer life-long coverage. Some providers call them permanent life insurance because of their longevity. It offers a death benefit alongside investment options to grow your sum.
Perks and Drawbacks of Term Life Insurance
Term life insurance policies, compared to whole life insurance policies, offer lots of wiggle room for policyholders. Some of their most attractive qualities include:
- Lower premium costs: Term policies don’t cost as much as permanent or whole-life ones. If you have a strict budget, you can take out a term policy until you can afford a more comprehensive alternative.
- No investment component: You may or may not want to invest your benefit for higher returns. Either way, the investment component can complicate things. Taking out a term life policy eliminates this component.
- Policy flexibility: Term policies only last for a short amount of time. Therefore, you can use it in various ways. For example, you might need a term policy to cover you during stints of unemployment or until you can obtain a more generous policy.
- Supplemental coverage: You can purchase a term policy alongside existing coverage. You can supplement benefit packages from an employer or current permanent policies with term policies.
Pros and Cons Whole Life Insurance
When you purchase whole life insurance, you never have to worry about renewing your policy. You also don’t have to rely on employment benefits for future financial security. Whole-life or permanent policies differ from term life in that:
- They have a longer coverage duration. Rather than a ten to 30-year coverage limit, you can keep your policy for the rest of your life.
- The death benefit builds cash value. What you see is what you get with term policies. However, whole life policies have greater potential to build cash value and future financial flexibility.
- They accrue taxable cash value. If you pass away, your term death benefit goes directly to your beneficiaries with no taxes taken out. However, whole-life counterparts are taxable.
- The premiums cost more. Since permanent policies cover you through thick and thin, they often cost more to maintain.
What Are Your Other Options?
While term and whole-life are among the most common policy types, you can still choose from other options, including:
- One-year insurance: This policy is similar to term life. However, it only covers you for a year.
- Universal insurance: Universal coverage is similar to whole-life in that it covers policyholders for a lifetime. It differs in that you enjoy more financial flexibility.
- Guaranteed insurance: These policies offer basic coverage with more expensive premiums without requiring medical exams.
Make Paramedical Exams for Life Insurance Fit Into Your Schedule With Medical Profiles, Inc.
Whether you pick term life insurance or whole life insurance, you will need a paramedical exam to make the most of your policy. How can you fit yet another appointment into your busy schedule? Call 832-251-3926 for convenient mobile exams from Medical Profiles, Inc. Our team can come to you or you can come to us.
Alternatively, need a local examiner to send your life insurance clients to? Send them to us!
