Are you thinking about purchasing an insurance policy, but everything just seems too overwhelming for you? A term insurance? Or a perm insurance? These terms don’t ring a bell, do they? But they will! Just keep on reading… Today we’ll be uncovering a forever lasting topic: Which insurance policy is better: the term or the whole life insurance? After reading this, you’ll surely be able to make a clear distinction between the two concepts and choose the policy you really need!

Taking this into consideration, maybe it is better to see this issue from another point of view – Which insurance policy is more suitable for you? It is a common knowledge that by purchasing an insurance policy, you basically make sure your dependents will receive an amount of money they will be able to use for your funeral, mortgage payment or even for a college tuition. But which one should YOU choose: the term or the permanent life insurance? What are the differences?

How to choose an insurance policy.

Probably two of the main factors you should think about is your financial goals and the possible financial needs of your beneficiaries… That is to say, the amount you can afford to pay for a policy will influence the total amount of money your dependents will receive in case something happens to you. By comparing these two factors, you will probably get at least a partial answer. But don’t get too excited, this is only the surface level of this matter. There are other factors you need to think about. Just take a look at some of the tips we have thoughtfully prepared for you…

• Don’t ignore the costs

As said before, your budget will influence the type of insurance to choose and therefore can help you make a decision easier. Think about how much you are willing to spend annually. Remember – no matter what your budget is, there is always an insurance policy that can help you too. So, don’t worry about your budget. Think about it – it’s better to have at least a short-term insurance than to have no insurance at all!

• Plan for the future

Another key aspect to consider – the future needs of your family. If something happens to you, will they be able to continue with the mortgage payment? Will they be able to send your kid to university, as planned? There are numerous factors that can definitely give you the answers you need. Of course, after having a rough idea about what you’re looking for, you should definitely contact a specialist, an experienced insurance agent to give you support and advice.

• Decide upon a time frame

How long are you planning to pay for an insurance policy? The answer to this question will surely give you another powerful hint. The longer you want it, the more you should think about a whole life insurance. Don’t ignore the benefits either!

Compare and Contrast

To put everything in a nutshell, you need to make sure you fully understand the differences and most importantly the advantages between the two types of life insurance: whole vs term life insurance. So, let’s get a little bit deeper into the matter!

The Whole Life Insurance

A whole life insurance is preferred by a large number of people due to several reasons. Just take a look:

• It provides coverage for as long as you live
• Cash value is accumulated
• It is usually eligible for dividends (This depends on several factors. Ask your broker or your insurance company for details)
• Another reason to choose it? – To make sure you leave something for your heir once you’re not around anymore
• Premiums can be more expensive compared to the Term Life insurance. But the costs of the policy remain the same as long as the policy is active.
• If needed, you can usually borrow money from your Whole Life Insurance account (Most policies provide this option, but ask your broker just to make sure).

Hint: Please note that this policy cannot be converted to any other type of insurance, so before you make up your mind find out all the pros and cons!

The Term Life Insurance

One of the easiest and most popular types of life insurance to understand is the Term Life Insurance. Here are some of the reasons people usually choose it:

• You have the ability to set the time frame
• The costs of the annual premiums are low
• It is cheaper compared to the Whole Life Insurance
• Most policies can be converted to Whole Life Insurance after a while
• You want to stay covered only for a set amount of time (for instance, until you pay your mortgage or you finish the construction of your home)

Hint: A drawback? The costs may increase at each renewal point. In fact, they usually do in most cases. So, you should ask your insurance agent for further details!

Final thoughts

Both policies have their own advantages and disadvantages. Even though the term life insurance is usually what most families look for, the perm life insurance comes with its numerous advantages as well. All in all, there is no general recommendation that can suit each and one of you. As said earlier, it depends on your own needs, plans for the future and budget. What we do recommend is to shop around until you find a perfect match for your family. A fact is certain – leaving a legacy is serious business. This is no time to rush! You need to find a viable option with a lasting value. Good luck!