What to know when choosing between term life insurance and whole life insurance.
Choosing the right life insurance policy is paramount to protecting your loved ones. But having appropriate protection depends largely on each policyholder’s life circumstances.
The difference between a whole life insurance policy and a term life insurance policy is important to consider when determining what type of life insurance is best for you and your beneficiaries.
As discussed in a previous blog post (insert whole life insurance blog link), a whole life insurance plan can be viewed as having a dual purpose: guaranteed payout at the time of the policyholder’s death, and an investment and savings option to maximize wealth during the policyholder’s lifetime.
Having more affordable rates, some choose to buy term life insurance as a flexible insurance option.
Here are some key advantages to term life insurance vs. whole life insurance:
- A whole life insurance policy lasts the lifetime of the policyholder but the length of a term insurance policy is a flexible — typically sold for 10, 20, or 30-year terms.
- Term life insurance can be available at relatively lower costs and premiums can be paid annually in a lump or by monthly payments.
- Whole life insurance guarantees full payout to beneficiaries upon policyholder’s death or, under special circumstances, partial payout to pay for compassionate assistance.
- Term policies can serve as income replacement in case of unforeseen events and cover smaller or larger debts such as mortgages or post-secondary education.
- A whole life insurance policyholder can in some cases access the policy’s cash value as a security for a loan or to complement and optimize retirement plans and income, and estate planning.
- A term insurance policy’s coverage amount and premium doesn’t decrease over the term period and is guaranteed renewal until the policyholder reaches the age of 75.
Depending on your life circumstances, both the whole life insurance policy and a term life insurance policy provides some sense of flexibility.
While there are key differences between whole life insurance and term life insurance plans, choosing the right insurance plan to fit your needs is one of the most important steps towards securing financial peace of mind.
When choosing the best whole life insurance in Canada or term insurance tailored to your specific needs, speak to one of our dedicated advisers who have the proper resources to provide you the best solution at the terms you need.
Contact us to inquire about accessing CHES Life products.