When you are looking for final expense insurance, Whole Life and Term Life are two of the most common options available. Understanding the differences between Whole and Term Life will help you determine which one is best for you.
Whole Life Insurance
Whole life insurance is intended for people who want lifelong coverage with level payments and a predictable structure. The person who would be interested in a whole life policy wants to “set it and forget it,” confident that their loved ones will be taken care of in their time of need.
There are several features associated with whole life insurance plans worth keeping in mind:
- Whole life plans remain active and in force until the insured person passes away or reaches age 100. At age 100, the policy will endow, and the benefit will be paid to the policyowner.
- Certain whole life plans can build cash value over time. This cash value can be used in multiple ways, including:
- Protection Against the Loss of The Policy: If payments are missed, instead of the policy lapsing and going inactive, the cash value will automatically be used to keep the policy going, maintaining the protection you need even through unforeseen circumstances.
- Cash Loans Against the Policy: You may request the cash value of your policy as a loan, which may then be used however you need.
- Qualification is quick and easy. No medical exam is required for whole life plans at Senior Life. Your eligibility will be determined by answering a short list of health questions.
- Whole life policies can be customized with riders, such as a rider to double the face value if the insured person’s death results from an accident.
- Compared to term life plans, whole life plans offer smaller face value amounts and slightly higher premiums.
- The premiums you pay will remain the same from day one of the policy and will never increase. The face value (or death benefit) of the policy will remain the same and will never decrease. These amounts are “locked in.”
So, who are whole life insurance plans for?
They’re for people who want:
- To lock in a good rate now
- Life insurance as a basic necessity, just like car insurance
- Immediate qualification without waiting for medical review
- Additional benefits and protections with their coverage
Term Life Insurance
Term life insurance is intended for people who are looking for the most bang for their buck. This person is less interested in the additional perks and wants to get maximum coverage for minimum price.
As with whole life, term life has certain attributes to keep in mind:
- Term life plans are active for a set “term” of time. If the insured person passes away during that time period, the face value will be paid.
- Compared to whole life plans, they are simpler. The riders available are limited and most term plans do not accumulate cash value.
- Often, a term plan requires a health check of some kind to determine eligibility for the plan. This causes a slight but often insignificant delay in the start of coverage.
- A term plan may expire without paying out any benefits.
- Term plans can start at surprisingly low premiums. It is worth remembering that these premiums may increase after several years. Some terms have level premiums, others have increasing premiums.
So, who are term life insurance plans for?
They’re for people who want:
- Maximum coverage for their premium dollars
- Higher benefit amounts than whole life insurance provides
- A straightforward plan without extra customization
Can You Have Both?
If you have a Whole Life policy, you may use a Term Life policy to supplement coverage for a temporary period.
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