When it comes to life insurance, you have many choices but perhaps the two most popular types of life insurance are term life and whole life. But what is the difference between the two and which one should you choose?
Whole life insurance is a type of policy that is designed to cover you for just that; your whole life. As long as you are paying your premiums, you will have the coverage. Whole life insurance builds a cash value which means that a portion of each premium that is paid goes towards the cash value that can, with a little time, be borrowed against. The risk of borrowing against your policy is that should you pass away before paying it back, your policy will be reduced by the outstanding balance. Whole life insurance is also often more expensive due to the investment aspect that is involved.
Unlike whole life insurance, term life insurance is designed to cover you for a specific period of time. Some examples of the term could be a set time frame like 10, 20, or 30 years or perhaps even to a certain obtained age. The benefit of getting a term life policy is that your premiums will be significantly less than a whole life policy. The downside, of course, is that you are only covered for a specific set amount of time. Term life insurance also does not build cash value however a lot of people find it attractive because it is more affordable than other types of insurance. If you don’t plan on keeping your life insurance for the long term (15 years or more), then term life insurance may be the right choice for you.
Speak to your local Diamond Bar independent agent and ask questions to find out which coverage best fits your needs.