If we were to ask you right now whether you have whole or term life insurance, would you know the answer? If you do then congrats, but do you know the difference between the two?
Life insurance is important not just for you, but for your family especially if you plan on expanding your family in the future. Let’s look at a few quick differences between whole and term life insurance.
Term life insurance means that you’re covered for the term of the policy. There are three types of term insurance; level, annual renewable, and decreasing.
- Level term means you’ll pay the premium for a fixed amount of time, usually about 20 years.
- Renewable is just as it sounds, you renew your policy regularly.
- Decreasing term means your coverage will lower as you age, the older you get the less your beneficiaries will receive.
As you probably suspected, whole life insurance means you’re covered for the entirety of your life. With whole life insurance your premium is likely to be higher than any term life insurance policy. Even with whole life insurance there are universal and variable policies, a topic to be tackled on another day.
Life insurance isn’t just black and white; there are many variables to the policies and you have to do you research to be sure you’re choosing the right one for you. As we’ve noted before, many policyholders think they don’t have enough life insurance. Make sure you know the difference between whole and term life insurance and review your current policy. If you’re unsure about whether it is enough for your beneficiaries, it’s time to do some research and find a better policy.