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What is term life insurance?
Think of term life insurance like a subscription. You buy a certain amount of coverage for a set period (this is your term) and pay a flat-rate premium every month. Your beneficiaries are guaranteed a lump-sum payout, also known as a "death benefit," if you pass away during your term. Term life insurance rates remain constant and tend to be more affordable than whole life insurance rates.
What is whole life insurance?
Whole life insurance covers you throughout your life as long as you continue to pay your premiums. Your beneficiaries are guaranteed a payout upon your passing. A specific amount of money paid into the policy can build a "cash value," which could increase the benefit or be borrowed against on a tax-free basis. Due to the duration of the coverage, whole life insurance premiums are typically more expensive.
Affordable premiums
Term premiums are typically more affordable. Whole life insurance premiums can cost significantly more per month. If affordability is a major deciding factor, check out term life insurance options as well.
Simple and straightforward
Just pay the monthly premiums and stay covered. If you pass away during your term, your beneficiaries get a payout.
Flexible terms
Have a mortgage to pay off? Thinking about tuition for the kids and retirement for you? Choose your preferred online life insurance term length and get coverage when you need it most.
Cash value
Part of the premiums you pay with whole life insurance can build up a cash value and earn interest. You may even be able to withdraw or borrow the policy's accumulated cash value.
Level premiums
Your premiums won't change from the start of your payment period to the end.
Coverage for life
Keep up with the premiums, and your coverage lasts for your entire life.
You really can't make an apples-to-apples comparison when comparing life insurance quotes. Term life is usually more affordable because its coverage term length is fixed, and there's generally no cash value accumulation. On the other hand, the whole life cash value component and lifetime coverage tend to bring up the costs. But both pay a death benefit as long as the policy is active and the premiums get paid.
Term life may work for you if:
- You need the policy to replace your income over a specified period, such as raising children or paying off a mortgage in the event of your death.
- You need to cover short-term financial responsibilities, like a bank loan or credit card debt, in the event of your death.
- You need extra coverage temporarily, such as during child-raising years or starting a business.
- You want the most affordable coverage.
Whole life may work for you if:
- You want a policy to last your lifetime, which can be used for legacy planning or to cover final expenses.
- You want a policy that could build a cash value over time.
- You're at or nearing retirement age.