I recently sat in on a meeting regarding life insurance. I consider myself somewhat knowledgeable about financial issues however I still learned some interesting ways to think about life insurance. One thing though that has not changed over the years is that people know they need it but they still refuse to buy it.

There are all kinds of reasons why people do not purchase life insurance such as, I can’t afford it or I am not going to leave any money to anyone.  All valid to some point but if you look at the experts and what they say it is just not smart not to have something.  If you are the primary wage earner in your household you should absolutely have a policy. If you are the person who takes care of the house and kids, you should absolutely have a policy. So in other words you should have a policy. The only question is what type of life insurance should you have? There are so many types and hybrids a person can get confused. But for today’s blog let us look at Term and Whole.

Term life insurance is a product which provides coverage at a fixed rate of payments for a limited period of time.  After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments and/or conditions. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time.

Whole life is for your whole life, which is the primary benefit of whole life: a payout is guaranteed. You will not have to worry about becoming uninsurable later in life, and unable to obtain life insurance of any kind. This benefit of a guaranteed payout comes with a price: your premium may be several times higher than the premium for a level term life insurance policy of the same face amount. This is because a portion of your premium goes to fund a tax-deferred cash value account. And of course, you are buying the life insurance for a longer time period: your whole life.

Which is better for you? I am not sure. However, there are many experts out there that can and will tell you the advantages to both. What I do suggest is that you research each product and select what is best for you.