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Life insurance should play a key role in planning for your family’s future financial security. Buying a policy is one of the most effective ways to ensure your loved ones will continue to be provided for after your death. However, before you start shopping for quotes, you must decide whether a term or whole life policy will best suit your needs. These are the most common types of life insurance, and they both have their benefits and drawbacks. Here is some insight into the key differences between the two options. 

Term vs. Whole Life Insurance: How Do They Differ? 

Duration 

Term life policies are designed to last only for a certain number of years, and the policyholder decides upon purchase how long they want to set the term for. The premium will be paid for that length of time to keep the policy active. Should a death occur within the designated timeframe, the beneficiaries will receive the face value of the policy. Meanwhile, whole life insurance will last a lifetime as long as the premium is paid.

Premiums 

life insuranceTerm life insurance generally offers lower premiums than whole life policies, although they can get more expensive over time as you age. Term policies come in two forms, referred to as guaranteed level and annual renewable. The guaranteed level keeps premium costs the same for the term of the policy, while the rate of an annual renewable will raise the premium each time the policy is renewed. In contrast, whole life insurance will maintain the same premium for the duration of the policy.

Cash Value 

In addition to providing death benefits, whole life policies have cash value that continues to build the longer the policy is in effect. If you need funds to cover an emergency, you can borrow against this cash value, or you can cash in the policy at any time and receive a lump sum. Term life insurance doesn’t have this added advantage. 

 

Once you understand how term and whole life insurance differ, you will be able to make an educated decision on which one to purchase. The professionals at Sun Valley Insurance are available to explain your options and arrive at the policy that’s perfect for your needs. Backed by more than 30 years of industry experience, they have helped numerous residents in Indian Trail, NC, and the surrounding communities protect the future of their loved ones. Call (704) 282-1155 to schedule an appointment or visit their website for more information on how they can assist you in finding high-quality, affordable products. 

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