Deciding to get life insurance in the United States is an excellent decision, especially when you have people who depend financially on you, such as your children, spouses or other relatives. But what do you know about the different types of life insurance?
Within life insurance, 2 different types stand out, which have different characteristics and benefits, but whose objective remains the same: to provide compensation to family members who depend on you when your time to leave comes.
In this article we will explain, in a simple and clear way, what are the differences between Whole Life and Term Life insurance, so that you can choose the one that best suits your needs and your financial capacity.
What is Life Insurance?
First of all, it is important to know that a Life Insurance is a policy that you can contract with an insurer in the United States, which will provide you with the service of paying a certain amount of money to the family members you select as beneficiaries of the policy.
This type of insurance is ideal, especially when you have family members who depend financially on you, so that they do not have to worry when the moment of your death arrives. The money that your family members will receive can be used for different purposes, such as the payment of debts that you have left, university tuition, etc.
What are the types of life insurance?
There are two main types of life insurance, which you can find in any insurer that provides this type of service among its policy catalog. These types are:
- Whole Life
- Term Life
Although both provide the same benefit of financially insuring the family members you choose to receive an amount of money at the time of your death, it is also true that they have a different method of operation, which we will talk about below.
What is Term Life insurance?
Let’s start by talking about Term Life policies. This type of insurance consists of hiring the life insurance service for a certain time, which you can choose together with the insurer you have selected, and the money will only be paid to your family members, in case you die within the term of duration that you have agreed.
One of the main characteristics of this type of life insurance is that both the amount of the premiums and the benefit that your family members will receive at the time of your death, remain the same for the duration of the insurance.
However, you must bear in mind that if you survive the expiration of the term period that you have agreed to when hiring your insurance, the policy will expire, the coverage will end and the beneficiaries you have selected will not receive any amount of money.
What is the duration of Term life policies?
The period for which you can contract a Term life insurance will depend solely on your decision and the agreement you reach with your insurer.
In general, Term life policies can last 1, 5, 10, 15, 20 or even 30 years, having the opportunity to renew it when the expiration date arrives.
Some people even prefer to buy the insurance until a specific age. For example, you can take out Term life insurance up to 70 years of age, if you reach that age with life, the policy will expire and the coverage will end.
What is Whole Life insurance?
Now that you know the concept of Term life, you will surely wonder what is a Whole life insurance? It is a life insurance that, unlike the term policy, offers coverage for life, which means that your family members will be able to receive the benefit, regardless of the age at which you die.
A main characteristic of Whole life policies is that, in addition to the benefit for your family members when you die, they also offer you the opportunity to create a kind of savings account called “cash value”, where a percentage of your premiums will be deposited , increasing in value over time.
When you reach a certain value in your cash value, you can make a cash withdrawal, which you can use for any type of emergency that arises in your life.
In summary, Whole life insurance provides you with coverage that does not expire in a certain time, but on the contrary, its duration is for life. In addition, the policy premiums usually remain the same and the benefit is guaranteed to your family members when the moment of your death arrives.
Whole life Vs. Term life Which is better?
Deciding what is the best type of life insurance for you is usually one of the most difficult decisions. However, there are many aspects that you must take into account before making your selection, such as the price of both policies.
Despite the fact that Whole life insurance usually has higher prices compared to term life, it must be taken into account that the term life requires a renewal if you survive the specified term, which could make the expenses for your life insurance much higher.
At Benefits Concierge Consulting Group we know that this decision is not easy, especially when you are unaware of the different advantages that both policies can offer you. Therefore, our commitment to you is to guide you to the life insurance that best benefits you and that fits your situation and needs.
Click here and fill out our contact form! We will call you in a matter of a few hours, listen to your case and give you the honest advice you need to get the ideal life insurance for you. Remember that our consultations are free and without any obligation.
