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Is It Better To Have Whole Life Or Term Life Insurance?

March 05, 20242 min read

Term Life Insurance

Term life insurance is a great solution if you're looking for a way to secure your family's financial future without breaking the bank.

This straightforward policy covers a specific period, usually between 10 and 30 years, guaranteeing a death benefit to your beneficiaries if you pass away during that term.

With its lower initial premium and flexibility, term life insurance is a preferred choice for many, especially those looking for temporary financial security.

Term Life Policy Checklist

  • Coverage Duration: Specific term, typically between 10 and 30 years.

  • Primary Benefit: Pays beneficiaries if the policyholder passes away during the term.

  • Ask your agent if the policy is an Increasing Term, Decreasing Term, or Level Term. Each term life insurance policy is different; some have benefits such as living benefits and a return of premiums option. Term life insurance does not build cash value. Death benefits are guaranteed as long as the policy is active.

Cash Back Life Insurance

Whole Life Insurance

This comprehensive policy not only ensures that your loved ones receive financial support upon your passing but also builds cash value that you can tap into over the years.

Although you start with a higher initial premium, your policy earns compound interest that is predictable and accessible on a tax-free basis. Some whole life policies allow you to earn dividends (when structured with a mutual life insurance company).

Whether you're planning your estate or considering a financial safety net with added benefits, whole life insurance presents a multifaceted approach.

Whole Life Policy Checklist

  • Coverage Duration: Lasts a lifetime, as long as premiums are paid

  • Primary Benefit: Accumulates cash value, has the ability to pay out dividends, and pays beneficiaries upon the policyholder's death.

What To Consider:

  • Higher initial premium.

  • The premium gets lower the longer you have the policy.

  • Cash value grows over time.

  • Eligible for company dividends, depending on the company.

  • Can be used for estate planning.

  • Ability to withdraw or loan against cash value. Requires medical exams and must meet income requirements.

Key Takeaways Before You Get Life Insurance

Evaluate Your Needs: Consider your family's financial situation, long-term plans, and personal concerns.

Research: Use an independent life insurance broker to help research different insurance companies and policies.

Eligibity Requirements: Factors such as age, health, and policy type affect the cost.

Consult a Financial Professional: They can provide personalized advice based on your situation.

Decide On A Policy: Choose term if you need temporary coverage or whole life for lifelong coverage and added financial benefits.

Review Regularly: As life changes, so might your insurance needs. Re-evaluate your policy every few years.

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Please note that Custom Pointe Financial LLC and its representatives do not provide investment advice or securities transaction services. We help our clients solely with safe retirement and life insurance planning.

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