Life insurance comes in two different types. Whole life and term life are the two most commonly available. Understanding the ins and outs of each one can ensure that you make the right choice for you and your family.
Whole life insurance is designed to last throughout your entire life, which is not the case with an insurance plan that you are offered via your employer. Whole life insurance has many other benefits as well, including being able to borrow against the value and gaining cash value as you pay the premiums each month. In fact, you can get to a point where the interest from the value of the policy will pay your premiums. This type of insurance will cost more, but it can be well worth it if you are looking for a more long-term policy that you are going to continue for the rest of your life.
Term life insurance is offered through your employer for the most part. This kind of insurance is cheaper in cost, but does not have a cash value amount and will only pay out if the insured makes regular payments and then dies. While this is the main aim of life insurance, if you have to leave work due to illness, after a period of time your insurance policy will lapse, leaving you with no life insurance.
A whole life policy offers the insured options. They allow an option of keeping the full policy active or the option of taking cash out of the policy during times of need. If all the money is taken out of the policy, the policy becomes inactive and the insured keeps the money that they received. Partial or full amounts can be taken from the policy, ensuring that they have options with the money that they have paid into the policy.
Term life insurance only offers a payout to the beneficiaries. By understanding the differences between these policies, you can determine which choice is best for you and for your budget.