For most American adults, carrying a life insurance policy is a good idea. This is especially true if you have a family. In the event of the unthinkable happening, you don’t want to leave them in a bad place. Most people have heard the terms “term” and “whole” when it comes to life insurance, but don’t understand what they mean. Let’s take a look!
Term Life Insurance
The “term” in term life insurance refers to a period that is set in advance when you purchase your policy. A local insurance agency Amarillo TX will help you draw up a plan for 10-30 years. If the worst should happen during that time, your designated beneficiary will receive the full value of the policy. If, however, you reach the end of the term, you will no longer be covered.
Whole Life Insurance
Whole life insurance covers you for as long as you’re around. It is usually more expensive than term insurance, but an added perk is that it works more like a financial investment that matures over time. You can borrow against the cash value of your policy to start a business or purchase a home, for example.
How to Decide What’s Best for You
Term life insurance is appealing to many because it is less expensive and more straightforward. It also pre-supposes that the policy holder will grow more financially stable as they age, and not need it after the term. That said, securing a new life insurance policy at an advanced age can be quite costly. While whole life insurance is more expensive and complicated, it may be a better option for someone who has the financial means to use more big-picture thinking. Of course, these are all discussions that should be had with your insurance agent, who can help you determine the best path forward.