If you have decided that now is the time to buy life insurance, then you have been studying the companies that offer life insurance and trying to decide what kind of policy would be best for you and for your life and situation. Whether you choose term life or whole life insurance depends on a variety of factors including your age and the status of your life.
The difference between term life insurance and whole life insurance is pretty easy to understand, but is not studied or understood by many people because of the unfortunate lack of interest in life insurance during the younger years of our lives. This lack of interest can lead to difficulties with becoming insured later in life because the person seeking life insurance has waited much too long.
Whole life insurance is life insurance that remains in place for the entire life of the insured person, or until payments on the whole life insurance policy cease. This kind of life insurance is usually a smaller amount than a term life insurance policy, and is meant to cover legal expenses and burial expenses after death, possibly also leaving the inheritors with some extra money. These life insurance policies may cover some of the debt of the deceased, but are not typically used to cover debt because of the longstanding nature of the insurance policy. A whole life insurance policy is best bought cheaply when the person buying the policy is young and healthy, as the policy will remain at the same price for the entire life of the insured.
Term life insurance is different, covering only a specified period of time rather than an entire lifetime. Term life insurance can be bought for specific periods of time ranging usually from a year to 30 years, although there are variations of these with some insurance companies. Term life insurance policies are usually bought to cover life changes including the birth of children or the incurrence of a large debt like a new home or a new car. The death of the insured will trigger the policy, which can help the family to take care of these debts. This kind of insurance is usually bought to cover the amount of time that the debt is scheduled for, like a 30 year mortgage or a five year car payment.
In some cases, the best way to use these two different kinds of life insurance policies is in tandem, buying a whole life insurance policy when you are young and healthy and maintaining it throughout your lifetime. When large debts are incurred or a period of high expenses is expected (like after the birth of a child), a term life insurance policy can help you feel like your loved ones are better protected.
Whole life insurance and term life insurance are two different kinds of life insurance that can work well apart, but often work best when used wisely and carefully together to protect your loved ones well into the future.