When you understand the difference between whole and term life insurance, it makes a difference. Knowledge is power. Life insurance is undeniably necessary to have. Understanding the nuances of life insurance policies impacts your life significantly. Today we’ll go over the difference between whole and term life insurance. We’ll also cover what happens when you outlive your insurance policy. Read on to become more knowledgeable.
Whole Life Insurance
You can consider whole life insurance to be permanent life insurance. So long as you pay the policy, it remains active. The benefit behind having a life insurance policy is that you don’t have to stress about insurability or losing your safety net when you become older. Whole life insurance is less straightforward than term life insurance.
One essential thing to note about whole life insurance is that you can use the cash value to your benefit. Each month, a certain percentage of your premium can go into a tax-deferred savings account or the cash value of the policy. The cash value can grow over time, and you can do many things with it, such as take out a loan, draw from it for retirement, or add to the funds.
Term Life Insurance
Term life insurance is straightforward. For a specific term, you pay a premium each month. The term means the number of years that you pay into a policy. For example, many term life insurance policies have a term of 25 years. Each month for 25 years, you pay a premium. As you age, life insurance becomes costlier. It’s crucial to start paying into a life insurance policy while you’re young. Even if you’re relatively healthy, being prepared is never a bad thing.
What Happens When You Outlive Your Policy?
Term life insurance is straightforward, but things can become tricky. Let’s say that a 30-year-old pays into a term life insurance policy until they’re 55 and continues to live for many more years. If this individual decides that they need coverage still, an insurance broker can change their policy into a whole life insurance policy. Some policyholders also have both whole and term policies. The main takeaway is that term life insurance does not have a cash value, so there is a lot to consider. Everyone is different and has different needs. Our experienced insurance brokers will find a solution that benefits you.
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Malden Solutions has a wealth of expertise in providing employer insurance solutions, HR solutions, and individual insurance solutions to businesses both big and small. Our team of seasoned professionals can help you navigate the rapidly-changing world of insurance with ease. We partner with businesses and individuals throughout the country to provide our dedicated services for employee benefits but also work within our surrounding communities in Maryland, Northern Virginia, and Washington, D.C. Contact us today to learn more about how we can provide effective, dynamic solutions for your business. Stay connected with us on Twitter, Facebook, and Linkedin.