Understanding the Difference Between Term and Whole Life Insurance

Overall, life insurance is one of the wisest investments Naples, FL residents can make. With life insurance, the people you leave behind upon your passing will be financially taken care of. However, before you invest in this type of insurance, it is important to determine the type of insurance you need. Many people get confused with term and whole life insurance, so here at Pro America Insurance, we have decided to explain the two briefly.

What to Know About Term Life Insurance

Term life insurance policies are designed to provide individuals with coverage for a pre-determined time period, such as 10 years, 20 years, 30 years, etc. In the event that you pass away during this timeframe, your named beneficiaries will receive the death benefit per the terms of your insurance policy.

When compared to whole life insurance policies, term life policies tend to be more affordable. In addition, the coverage period is more flexible. The primary downfall to these policies is that there are no benefits once the plan expires. Luckily, once your term life policy expires, it is possible to convert it to a whole life insurance plan.

A term life insurance plan should ultimately be chosen if you want to invest in life insurance but have a low budget. Another instance is if you believe your coverage needs will fluctuate over time. For example, it is common for young parents with a strict budget to opt for a term life policy.

What to Know About Whole Life Insurance

Unlike term insurance plans, whole life insurance policies will never expire—unless you stop paying your premiums. Eventually, these insurance policies could begin to accrue a cash value. Once this happens, you can actually borrow against your policy to help supplement your retirement income or for an emergency.

The main disadvantage to whole life insurance policies is that they are more expensive. However, if you enroll in a plan when you are younger and healthier, then you will be able to lock in lower rates that will remain the same for the life of the policy.

Whole life insurance plans make the most sense when you are a high-income earner and want to ensure that your family is able to maintain the same quality of life upon your passing.

Even with the aforementioned information under your belt, term life and whole life insurance can still be confusing. As a Naples, FL resident, you want to ensure that you choose the best life insurance policy for you and your family. If you have any questions and need help, reach out to us at Pro America Insurance.