An average funeral in the United States runs between $7000-10,000. That can be a crippling amount without life insurance.
While searching, you probably have wondered what the difference is between whole vs term life insurance. There are important differences that you should understand.
If you are confused by the two different types of coverage, don't worry. We've got you covered. Let's look at the difference between the two and which one is better for your situation.
Whole vs Term Life Insurance: Costs
Term life insurance is almost always cheaper. This is because it is designed to last for a certain amount of time before expiring unless you want to pay more to extend it.
Whole life insurance is more expensive. The reasons for this is that it lasts your entire life (hence the name "whole") and because there is a financial component.
Part of your payment will go towards a separate account that you can borrow against.
The percentage that goes towards this will depend on the policy, and if you take a loan against this amount, you will have to pay the loan amount back plus interest.
Benefits of Term Life Insurance
If you are looking to give your family a sense of stability until they are able to financially take care of themselves, term life insurance is for you. Normally you can choose to be covered for up to 30 years.
Many people will do this to cover their children until they are out of school and into the workforce, or until they are ready to commit financially to a whole life policy.
Benefits of a Whole Life Insurance Policy
Knowing that you are covered for the remainder of your life is a huge benefit. There is no need to worry about what will happen when you term life policy runs out, and you won't have to shop around for another policy again.
The ability to draw money out of the policy is another great benefit. If something happens, and you need money to cover your bills, you will be able to take a loan out against your policy.
While some people view that as accruing unnecessary debt, there are many people who need this option. You will be adding money to your potential loan without having to think about it.
Picking the Right One For You
When considering whole vs term life insurance, there are so many various companies and policy types that it can get confusing. Remember that you have to think about not just where you are now, but where you plan on being later.
The NC Dept. of Insurance has a checklist online to help determine how much insurance you need. Knowing what you need depending on where you are at in life can save you time and money.
As your situation changes, you will want to have someone that can walk you through the process of evaluating your life insurance.
You will want to choose an agent that not only understands the business but also works well with people. Life insurance, at its core, is a business all about people and helping them reach their goals.
We believe that if you read our testimonials and talk to us, we can show you what separates us from other insurance companies. We will gladly help you choose between whole vs term life insurance.