Which Is Better: Term Life or Whole Life Insurance?

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Whether term life insurance or whole life insurance is better will depend on which insurance will provide coverage to the insured upon death. Term life insurance is cheaper, but it only lasts for a set number of years, while whole life insurance lasts forever and is more expensive. Consult an insurance agent to discuss life insurance options with tips from a financial adviser and insurance broker in this free video on life insurance.

Part of the Video Series: Insurance Tips & Facts
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Video Transcript

This has been John Pinelli, financial representative talking to you today about what is better, term life insurance or whole life insurance? Well the type of insurance to have is the insurance that's enforced when you die. Now term insurance will typically cover you for a specified period or term of time. This could be 10 years, this could be 20, 30 years, this could be till an attained age such as up to age 80 and it will specifically cover you for that time. If you die during that period of time, your family or whoever is your beneficiary will receive the face amount of insurance that you had. You're paying specifically and only for that amount of insurance. Term is typically very cheap, very affordable and it's a great way to provide some sustenance for your family in the even that you're lost. So if you're the main breadwinner in a family, you've got a stay at home wife with two kids, then you would definitely want to look at some life insurance, term would be a great way to meet that goal for a high amount of need while at the same time maintaining a low cost. Whole life on the other hand provides you insurance coverage for your whole life. It's not a matter of if you die during the specific time period, it's a matter of when you die, your family is going to get paid out this amount of money. Now with whole life, often times the insurance will actually increase in face amount. That doesn't mean that you're paying more each month or year, it just means you're getting more insurance coverage. Now in addition to that, your whole life policy may also be building some cash value. So should you choose to stop paying the policy to get rid of the policy, etcetera, you can receive a full cash surrender value. Now that cash surrender value may be less than what you've put into the policy or it could potentially even be more than what you've put into the policy in terms of premiums. It just depends on how long you've been paying the policy for and the dividend rates of the company that is offering you this whole policy. Typically whole life policies are quite bit more expensive than term and that is because they do offer this cash surrender value almost in the same light as say a savings account. So not only are you getting this insurance, insurance fact amount, but you are also building a nice cash value which can be taken out basically at any time. In some cases the cash value is a great way to build some savings for things like retirement and other financial goals. Another great aspect of whole life is it's a great way to guarantee the passing on of a portion of say a large estate to your loved ones, family, beneficiary, etcetera. You can guarantee that you're passing on this large amount when you die and the proceeds from that will be tax free. Great way to put away a small amount of money sort of avoid some of the hefty estate taxes if you have a large estate and provide immediate source of cash to family members and loved ones as a very liquid asset whereas things such as like your home, might be a little bit more difficult to liquidate and actually get the cash from. So the life insurance proceed would provide you with that immediate cash source for the family members.


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