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Which is better? Whole or Term Life Insurance?

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Senior couple studying terms of life insurance policy while having meeting with highly professional agent, interior of modern office with panoramic windows on backgroundThere are so many insurance options. How do you know what the differences are and determine which is right for you?  The team at Hyers & Associates would like to end the confusion and help walk you through what the differences are between these two types of life insurance.

The major difference between whole life insurance and term insurance has to do with whether you want to accrue cash value in your life insurance policy. Whole life insurance will accrue a cash value throughout the life of your policy, which will be paid to your beneficiaries when you pass away but can also be used by you while the policy is in force. Term insurance is paid to your beneficiaries for the stated value only at the time of your death if the policy is in effect at the time of your passing.

But Which One Should I Choose?

There is no simple answer to which option is right for you.  As you go through life things change, and as those changes occur what you consider ‘the best option’ may change as well. The typical variables that will affect your decision include your age, marital status, income, and your personal preferences as well.

Also, taking a look at your financial goals will help to define which option is best for you. As you age your personal financial status changes and your goals will change. Some of the financial goals and objectives to consider are:

  • Your Personal Financial Goals
  • Your Financial Security
  • Building your Financial Assets
  • Your Beneficiaries’ Financial Goals
  • Leaving a Legacy

As you can see there is a lot to think about, so let’s sort through those variables.

The Advantages of Youth

As we get older we like to reflect on the joys of being younger. We also tend to forget we are just beginning careers and are at the lower end of the pay scale. You’re healthy and may be single or newly married and possibly have a young family. In those instances, it may make sense to have term insurance which will have lower premium costs, help your family, and cover your burial expenses if something should happen to you.

However, if you can afford a slightly higher premium with whole life insurance, your rates are lower now as you are generally healthier. It can also be the opportunity to start building cash value in a policy for financial security later in life. As the policy ages, its value increases and its cash value can become a resource for you or your family needs.

The Advantages of Getting Older

As we get older the direction of our life becomes clearer, and our objectives are clearer, and frequently our income is higher. We are also getting older and more likely to develop health issues. Term insurance may make sense as an economical way to make sure your spouse and family will be taken care of if something should happen to you. You may also start to think in terms of a whole life insurance policy being affordable so you can leave a legacy for the people you love and care about.

As we grow older, it’s also a time to think about wealth transfer strategies.  Few assets pass to heirs as efficiently as life insurance policies. Many of our clients inquire about single premium life insurance and fixed pay policies that guarantee a death benefit to age 120. The fact that these plans pass tax free make them very attractive. And several policies also offer an Accelerated Death Benefit as well. This means you, the insured and owner, can access the death benefit while you are living! This is a wonderful feature if you need funds to cover the costs of a chronic illness.

Let Us Help You Sort Through Your Options

The team at Hyers & Associates knows the ins and outs of whole life and term insurance. Insurance is what we specialize in, and we work on it every day. We would like to help you sort through where you are today, where you want to be in 10 years, show you what options are available, what’s affordable, and help you meet your financial goals.

We can answer any questions you might have, so give us a call today and let us help you sort through your options and make the best decision that’s right for you.

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Category: Life Insurance

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