Term Life and Whole Life Insurance: What's the Difference?

One important insurance product every head of household should carry is life insurance. Life insurance kicks in when a policyholder passes away. It is used to cover funeral costs and provide a financial safety net for dependents. Two of the main types of life insurance are term life and whole life, each offering benefits for different circumstances.

Term Life Insurance

Term life insurance provides a payout if the policyholder passes away during a specific timeframe, which could be 10, 20, or 30 years for most policies. Term life is the cheapest type of life insurance since it only pays if the policyholder dies prematurely. Term life insurance is best utilized during a family’s main billpaying years, such as when they’re paying mortgages and raising children. The amount should be enough to replace the policyholder’s income and provide the family with the same standard of living. Ideally, children will be grown, investments will be paid off, and retirement savings will be adequate by the time the policy expires.

Whole Life Insurance

Whole life insurance is permanent and guarantees a benefit. The policy's cash value slowly grows at a guaranteed, tax-deferred rate, leaving the policyholder with the option to borrow against it or cash it in early. Whole life insurance is more expensive than term life because the payout is guaranteed, but the premium never changes. Just as with home and auto insurance, whole life insurance can be customized to meet a buyer’s specific coverage needs.

Invest in Life Insurance Today

If you own any assets or have any financial dependents, you can’t afford to not invest in life insurance. A solid policy from a trusted insurance company offers peace of mind that your investments will be protected and your loved ones will be cared for should something happen to you. Connell & Curley Insurance Agency Inc. offers term and whole life insurance policies, and we can customize a plan that works for your family. Call our insurance agents today at (508) 655-1112 to learn more.