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Life Insurance Pros and Cons
When deciding on the right life insurance coverage to help protect your loved ones, weighing the pros and cons can help you narrow down your needs. Term life insurance and whole life insurance are the two most common types of life insurance. Listed below are the pros and cons for each.
Term Life Insurance
Term life insurance offers policy holders a "benefit only" plan. Typically, term policies remain in effect from five to 30 years, depending on the term you choose.
- Term life plans are the most affordable type of life insurance.
- Term life plans are easy to understand.
- Term life plans can be renewable in some instances.
- If you outlive your policy terms, some providers will return all or some your paid premiums, or offer to change your policy to a whole life plan.
- Term life plans do not have a cash value.
- Many terms plans require you to take a physical and answer a health questionnaire for eligibility.
- Coverage is limited to your term lifespan.
- If you outlive your policy and choose another term life plan, your premiums may increase.
Whole Life Insurance
Whole life insurance is a type of permanent life insurance that covers the insured for their entire life. In addition to providing a death benefit, whole life policies accrue cash value.
- Whole life plan coverage lasts for your entire life and doesn’t change as long as your premiums are paid.
- Premiums typically stay the same for the life of the policy.
- Whole life builds cash value that can be borrowed against while living.
- Whole life policies can be useful for estate planning purposes.
- Whole life insurance is usually be more expensive than term life.
- Whole life insurance can be more difficult to understand.
- Whole life's investment component may be unnecessary for your needs.
Understanding Your Life Insurance Needs
Life insurance is a way to help family members or those left behind after your passing adjust to life without your extra income. Typically it’s a good idea to take out a policy that is worth at least 7-10 times more than your annual salary. This will ensure those left behind can continue to pay bills, mortgages, and other expenses for years to come.
Who Needs Life Insurance?
Generally, people who fall into any of the following categories can benefit from a life insurance policy
- People with spouses
- People with children or other dependents
- Business owners and entrepreneurs
- People that want to pay for final expenses and funeral costs
- People with outstanding debts
Contact an Agent
A licensed agent can help you explore your options and match you with a life insurance policy that works for you. Speak with an agent at 1-800-966-7169, or read through our guide, Determining Your Life Insurance Needs, to learn more.
*Applications for insurance may be subject to acceptance by insurer. Rates and coverage amounts will depend upon the carrier selected.