If you're in your twenties or thirties, you may already know that there's no cheaper time in your life to purchase a life insurance policy. Whether you're interested in a term life policy to carry you through to retirement or a whole life policy that can build value and act as an investment, your cost for life insurance will only increase over the next few decades, even if you maintain good health and safety habits. So when you're shopping for your life insurance options, how can you make the right choice? Read on to learn more about the benefits and potential drawbacks of term and whole life insurance policies and which one seems a better fit for your life.
Why Choose Term?
Term life insurance, as the name implies, remains in effect for a specified period of time (usually anywhere from 10 to 30 years). If the insured passes away during this term, the insurance policy will pay out the full face value. If the insured doesn't pass away, the insurance policy loses any value on the day it expires (although the insured can always opt to take out a new term policy or, in some cases, extend the current policy).
Term life insurance can be a great choice for those who want to protect against income loss for their dependents while in the prime of life. Although dependents may be eligible for Social Security benefits upon a parent or spouse's untimely death, those in their twenties and thirties or without much work history may find that these projected benefits simply aren't enough to replace your income. And financial worries are the last thing you want for your spouse or children on top of the pain of losing you, so if you have anyone who relies on your income, it can be a good idea to take out a term life insurance policy that will carry you through to retirement.
Why Choose Whole?
Whole life insurance policies differ from term life policies in a few key respects. First, unlike the "use it or lose it" nature of term life policies, whole life policies accrue value. Policyholders may be able to borrow against the value of this policy even if they never make a claim.
This can make whole life insurance a good investment on behalf of those who are young, in good health, and generally cheaper to insure (like minor children). If you take out a policy on your child after their birth, its value will likely grow for decades, providing a nice lump sum to help pay for college or serve as a down payment on a home.
To learn more about the benefits of life insurance, contact resources such as Jack Brier.