Choosing whole or term life insurance

The basic difference between term and whole life insurance is, term insurance is life insurance for a set period of time, while whole life insurance has many other benefits like cash value at the end. That may make whole life seem like a better deal, but a lot depends on your situation and what your needs are.

Both policies provide basic life insurance, a death benefit for the person named on the policy, and that death benefit is normally tax free.  Term insurance is often recommended for younger people, or people who need coverage for a specific amount of time. Whole life is more aimed at the long term, and can be considered part of a long range financial strategy. At the end of the whole life policy there will be a cash benefit available. You may re-invest that in a new policy, or you can borrow against it in a partial surrender.

Initially the term life policy costs less, and the price stays the same for  the entire term, usually a fixed number of years. At the end of that term the policy expires. If you renew the policy it will usually be at a higher price, and it will go higher as you age. There are some policies now that allow you to convert the policy to a permanent policy that can build some cash value.

The whole life policy costs more to start with but it does not increase. Your policy could be for 10 or 20 years and will not change. However, it will expire at some point. At that time you can take the cash value or reinvest it in the policy.  There is also the possibility of cash value growing through dividends in some policies.

Come by, or call our agents at Cross Creek insurance to discuss your life insurance needs.