Buying an insurance policy is easy. The difficulty lies in choosing the right one for yourself. For example, if you buy whole life insurance in Phoenix, your insurance service provider will offer you many insurances, which might confuse you further.
At Heroes Financial Group, we help you understand your options better, so you can choose an insurance that better suits your needs.
This blog is one such effort where you will learn the major differences between term life insurance and whole life insurance and which one you should buy.
What is Term Life Insurance?
What is Whole Life Insurance?
Difference Between Term Life Insurance and Whole Life Insurance
The cost of both insurance types plays a significant role in deciding which insurance you must choose.
On average, term life insurance costs $22-$40 for a $500000 insurance death benefit coverage. The premium amount is affected by the age of the insured and the term for which the insurance has been bought. In addition, if you have any medical condition, the premium amount shall be higher.
Whole life insurance is five to fifteen times more expensive than term life insurance.
So, if you are a price-conscious buyer, then term life insurance is the right choice for you.
Whole life insurance also offers cash value which is not available in term life insurance.
A cash value is a benefit wherein you can cash on the additional amount other than your death benefit. So, if you have taken a $500000 whole life insurance and have been paying a premium for the last 25 years, you can take a specific loan on your policy.
It is a very beneficial option for emergency needs. But the equivalent amount is deducted from your death benefit if you fail to pay back the loan, and you must also pay back the outstanding interest on such a loan.
Term life insurance does not offer any such benefit, and you cannot use it to accumulate cash value. You may be able to get back what you pay after the expiration of the term with a return of premium plan.
So, if you are also looking for additional financial aid from your life insurance, whole life insurance is the one for you.
If you want to stop term life insurance, you can simply stop making premium payments, and the policy will lapse after a certain time, but whole life insurance is more complex.
In the initial years of buying the policy, if you stop making payments, you must pay a surrender charge of up to 10% of the cash value. So, you will not benefit from the policy and must pay additional charges.
You buy whole life insurance when you are sure that you can pay premiums for your entire life. If you are unsure, term life insurance will do for you. You can buy term life insurance for a short period, such as ten or fifteen years, and then renew it for a longer period. This way, you can keep the policy without having the obligation for a lifetime.
Term life insurance policies have no cash value component associated with them. You don’t get any interest on your premium.
Whole life insurances differ here. Many whole life insurance policies pay guaranteed 1-4% interest, making this policy more attractive.
Which is Better?
After going through the above differences, you can decide which life insurance policy is better as per your requirements.
If you are a price-conscious buyer unsure of a permanent policy, then term life insurance is for you.
If you are sure you can pay premiums for your whole life, and its complexity doesn’t bother you, whole life insurance is the right choice.
Whole Life and Term Life Insurance in Phoenix
Heroes Financial Group is committed to helping you buy the right insurance policy you need. Be it term life insurance or whole life insurance in Phoenix, we have many options for you, and our professional agents help you pick the best life insurance policy for you and your family.