If you’re over the hill already, you’re probably starting to realize the aging process has its fair share of pros and cons. While it’s nice to enter retirement and finally become a grandparent, aging also means your strength and stamina start to go, too.
That’s just the way life goes, but thankfully, you still have plenty of ways to enjoy yourself until your time comes. One thing you definitely need to do before it does, though, is invest in life insurance.
Life insurance isn’t exactly the most glamorous part of aging, but it’s absolutely necessary. Without it, you leave behind a whole load of stress and stacks of bills for your family. This isn’t the best way to go out.
To make the matter of life insurance easier for you, check out the differences between term life vs whole life insurance described below.
What Is Term Life Insurance?
Term life insurance is pretty much what it sounds like – life insurance that provides you coverage during a certain term. Once that time has passed, though, you either need a new plan or you’re out of luck.
Still, many people see a benefit in choosing this life insurance option. Here’s a little more about it.
Term life insurance can be bought for as little as one year and as much as 30 years. Choosing the right time you’d like to buy one for depends on things like how much longer you have until your mortgage is paid off and whether or not your kids are able to financially stand on their own two feet yet.
The timeline for these things will help you make sure the proper funds are in place in case something happens to you. Once you have a set number of years in your head, you can start thinking about how much money will be needed to support your family. Then, you set the premium.
Premiums for term life insurance are locked in. They don’t change, and they continue until the term of the policy expires. You can pay this fee every month or every year, but be sure to pay it.
The Pros and Cons
Everyone likes the thought of planning ahead for their family. But, not everyone is a big fan of doing it with term life insurance. Take a closer look at the pros and cons before making your mind up about this option.
The pros of term life insurance are:
- fixed premiums
- lower premiums
- simple to understand
On the other hand, the cons of this kind of coverage include:
- the policy does expire
- there is no cash value associated with term life insurance
- specific health requirements have to be met after a certain age
Once term life insurance is gone, it’s gone. But, if you and your family need it during the length of your contract, you’ll be glad you had such an affordable way of thinking ahead. It may be the best life insurance for you if you need a cheap way to make funds add up.
What Is Whole Life Insurance?
Do you think you’d be more comfortable knowing you were covered for life? This is what most people assume, but they don’t take the time to understand what whole life insurance is really like.
Keep reading to make sure you’ve got the right idea.
Whole life insurance starts the day you sign up for your policy and ends once the stated beneficiaries have received their support after you’ve passed. The money beneficiaries receive adds up in two ways, though, which is pretty cool.
First, the premiums you pay go into your post-life funds, just as with term life insurance. But, there’s an added cash value component that accrues interest over time in your favor; it works like an investment to add to your existing funds.
The Pros and Cons
The pros of whole life insurance are pretty clear to see. Just to clarify, the biggest ones to consider are:
- coverage for your entire life
- cash value
- tax benefits
Still, there are some cons you need to be aware of before signing up for such a policy. The major cons of whole life insurance include:
- higher monthly premiums
- the policy can cancel if you miss a payment
- the taxes can catch up to you if you aren’t careful
The thing about whole life insurance is that as appealing as it may sound at first, there are a lot of intricacies associated with the various forms of it. You can buy a traditional, variable, or universal form of whole life insurance, each with its own rules about taxes and payment expectations.
Not to mention, if you suddenly find yourself in some sort of financial crisis, you really can’t afford to miss a payment. You have to be sure you can keep up in order to provide yourself and your family with the peace of mind that you wanted life insurance for in the first place.
There is one catch: in some cases, you can switch your whole life insurance contract to a term life insurance policy. This won’t be easy, and it’s not ideal, but at least you don’t lose all your coverage. Good thing you know enough about each one if you ever find yourself in this kind of situation!
Deciding Between Term Life vs. Whole Life Insurance
At the end of the day, the biggest thing to remember when choosing between term life vs. whole life insurance is that you can’t afford to go without insurance at all.
This kind of financial carelessness can land you and your loved ones in a lot of trouble. It causes unnecessary stress and makes payments add up faster than you can blink.
If you still want a little more clarification on what life insurance is all about, click here.