One of the biggest things to consider when looking into insurance is the exact plan that you will be part of. Of all the different factors that can go into any insurance, the question of "whole life versus term" can be a major roadblock, especially if you do not actually know what either of those two options mean.
Here is a quick overview of whole-life insurance, term life insurance, and how to get hold of a whole life versus term calculator to make everything a little easier.
What is Term Life Insurance?
Term life insurance is generally considered to be the "basic" form of life insurance and is usually the one that most people will see first if they are looking at a list of options on offer. It is more affordable than the majority of other options and still provides the same core benefits as any other kind of life insurance, including the pay-outs upon the designated person’s death.
However, this 'term' is only a set period of time. For example, getting a 30-year term life insurance plan means that you are covered with affordable life insurance for thirty years, but after that, you will have to re-buy a plan. Term life insurance can be anything from a single year to multiple decades, depending on who offers it.
Sometimes, you will have the option of making your term life insurance into a permanent plan further down the road. This allows you to ignore the expiry date and keep the same level of insurance in the long-term, although it can sometimes cost more as well.
Why use Term Life Insurance?
Term life insurance is very affordable and relatively simple, usually not including anything that you do not actively need. This makes it accessible to anybody as long as they have the money to pay the life insurance consistently, and it does not rely on highly specific deals or plans.
Of course, term life insurance is not right for every person, and there are times where something more permanent or structured is needed.
What Is Whole Life Insurance?
Whole life insurance takes the concept of life insurance and applies it across your entire life, often “locking you in” with a set price and agreement that should not change over time. This means that you will always be paying the same monthly or yearly price no matter how your health changes or how old you get.
These plans are often more expensive overall compared to term life insurance but come with a kind of guarantee that you will have coverage until you die. The cost also remains the same the entire time unless you agree to change it, which means that you will still be paying the same rate even if your health declines to the point that the insurance would normally cost twice as much.
You do not have the option of converting whole life insurance back into term life insurance, but you can sometimes break the policy early if you need to. There are also multiple ways to take cash out of the policy in emergencies, so the money is not “swallowed” by the policy with no way to get it until you die.
Why use Whole Life Insurance?
Whole life insurance is a more solid choice in the long-term since it covers your entire life in a consistent and controlled agreement. The average cost may be higher, but it can also save you money if your health gradually gets worse over time, since term life insurance usually costs more when you are at greater risk of health problems.
Whole Life versus Term Calculator
There are various ways to find the best option for you, but if you’re completely stuck, then a proper whole life versus term calculator can show you exactly which option you will get the most benefits from. Even if you are just browsing and are not sure whether you will get life insurance yet, it can be helpful to estimate the costs.
Remember that life insurance costs usually depend on the condition of the person the insurance revolves around, so any health issues or concerns can bump the price up over time. The better your current health, the cheaper your insurance will be, so sometimes it is best to start looking for an insurance plan early, just in case.