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Life insurance is a necessity regardless of your current age. Death is a subject that people don’t always like to talk about, but it’s inevitable and can happen when you least expect it. If you’re the main bread winner of the family or contribute financially to your loved ones’ lives, what will they do as far as money is concerned in the event of your untimely passing? If you’re unable to answer that question confidently, it’s time to start looking into taking out a life insurance policy. There are two main types of coverage: term and whole. Both have their pros and cons, so it’s critical that you weigh the options before signing up.
What is a Term Policy?
Term life insurance is typically more affordable and straightforward for individuals who have struggled in the past to receive coverage. While many financial experts recommend term policies, they aren’t right for everyone since they expire after a certain period of time. A term contract with any provider can last for anywhere from one to 30 years depending on how long you want to be covered. You’ll pay a small amount each month towards the premium, usually around $30, so that it remains active. Death benefits are available in the event of your passing. There is absolutely no cash value regarding this particular type of account, so you won’t be able to cash in on it later on.
What is Whole Life Insurance?
Whole life insurance is a permanent account that you have for the rest of your life. People typically sign up for coverage when they’re younger and continue to make payments monthly to keep their policies active. However, whole life insurance is about six to nine times more expensive than the alternative. For this reason, it might become difficult for you to continue making payments if you’re unable to maintain them later on in life. However, unlike term coverage, whole life insurance provides you with permanent, steady cash value. You are able to know the value and can expect it to increase over time as interest is accrued. You can cash out on the policy at any time and receive a lump sum when needed.
Which One is Right for You?
If you’d like a steady, straightforward plan that is easier on the wallet, you should consider a term contract. This provides your loved ones with the peace of mind in knowing they’re covered financially if you’re no longer able to be there to provide for them. However, if you’re in need of a long-term solution that you may want to cash in on when an emergency strikes, whole life is the best choice. It’s important to discuss both options with your family before signing any contracts or paperwork.
Application, Exams and Settlements
In many instances, insurance companies will require that you have a physical examination done prior to being approved as a customer. This is because certain conditions, like having an underlying disease or being a smoker, makes you more high-risk. Companies don’t always like to give insurance out to individuals who are considered to be a health risk. Applications can typically be done online and you can look into receiving a settlement for cash value as it becomes necessary.
