If you say the words “life insurance,” most people will probably think of financial protection for their loved ones in case something happens to them. However, there are several different types of coverage available. Two of the most popular policies offered by an insurance company are term and whole life. For those considering securing a policy but are unsure about the differences between the two, here is a helpful guide.

How Term & Whole Life Insurance Policies Differ

Term Life Insurance

As implied by the name, term life insurance is in effect for a predetermined amount of time. Most plans are available in terms ranging from five to 30 years. Essentially, the policyholder pays the premiums for the amount of the term. If the policyholder dies, an insurance company pays out to designated beneficiaries such as spouses and children. Term life insurance can be renewed at the end of the policy’s term for the same time frame or an extended one.

One of the key features of term life insurance is the policyholder can not withdraw benefits while they are still alive. The funds are not accessible to pay for expenses. Depending on the policy and the age at which a person starts coverage, the premium payments can be low. Rates are generally higher for those who secure a policy when they are 50 years or older.

Whole Life Insurance

A whole life insurance policy provides financial protection for the policyholder’s entire life. With this type of insurance company coverage, there is no end term. As premiums are paid on the policy, cash value is accumulated along the way. It typically takes more than 10 years to build cash value. After enough funds have built up, the policyholder can withdraw or borrow a portion of it to pay for a wide range of expenses—such as home improvement projects or college tuition—if desired.

Death benefits are also distributed to designated beneficiaries after the policyholder dies. Unlike term life insurance, a whole life plan may require a physical exam to determine eligibility. However, some insurance company policies do not require a health exam. Compared to term policies, the premiums for whole life insurance are generally higher.

If you’re in the market for comprehensive and budget-friendly life insurance, the search doesn’t have to be daunting. The experienced team of agents at Cundiff & Company Insurance in Somerset, KY, will help you secure customized coverage for your unique lifestyle. To get started on providing financial protection for you and your loved ones, call (606) 679-8379 for a free, no-obligation quote. Visit the website for information on the insurance company’s complete suite of options.