What’s the Difference Between Term and Whole Life Insurance?

Having a life insurance policy helps protect your partner and children from financial losses in the event that something happens to you. When a policyholder passes away, family members named as beneficiaries will receive payment that is usually not subject to income tax. If you are trying to determine the best type of life insurance for your unique situation in Willmar, Minnesota, MG Insurance Inc. is here to help. Read on to learn more about the differences between term and whole life insurance.

Overview of Term and Whole Life Insurance Policies

Term and whole life insurance are two of the most common types of life insurance, and the main differences between the two are the duration of the policy and the cost. Term life insurance tends to be less expensive and covers you for a certain amount of time, paying out if you pass away during the term. Whole life insurance is intended to last your entire life and has an amount of cash value, which makes it more expensive. Your family can spend the death benefit on several costs including funeral costs, debt, college tuition, etc. The type of insurance policy you need will depend on your coverage needs.

What Is Term Life Insurance?

Term life insurance lasts for a specific period of time, (usually from 10 to 30 years), and will be paid out if you die during the chosen term. If your coverage ends, or if you outlive the term, the policy expires and your beneficiaries don’t receive a payout. With term life insurance, your insurance costs and the benefit amount typically remain the same throughout the term. Term life policies are fairly simple and cheaper, and could be beneficial if you are looking for an insurance policy that will help out your family when you die.

What Is Whole Life Insurance?

Whole life insurance is a type of permanent life insurance and is intended to last a policyholder’s entire lifetime and pays out any time they pass away. There is a cash value element to whole life insurance that increases over time and involves a portion of the premium to be paid into an account. A policyholder is able to borrow against this account or give up the policy for cash once they have built up enough cash value. Premiums for a whole life insurance policy will stay the same for as long as the policyholder lives and the cash value account continues to increase at a fixed rate.

Get Life Insurance Policy Assistance

Obtaining a suitable life insurance policy is an important investment you can use to help out your loved ones. If you are trying to determine the best type of life insurance policy in Willmar, Minnesota, contact MG Insurance Inc. today for a consultation.