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Life insurance is an important part of any financial plan and can help you prepare for the future in various ways. However, to ensure it serves your intended purpose, you must purchase the right kind of policy for your needs. When choosing between whole and term life insurance, understanding the benefits and concept behind each is essential for making a sound decision. Here is an overview of how these types of coverage differ and whom they are most suitable for.

Whole vs. Term Life Insurance

Whole Life Insurance

life insuranceWhole life insurance offers lifetime coverage rather than a set term. As long as your premium payments are up to date when you pass away, your beneficiaries will receive a death benefit. Rates are typically on the higher end for whole life policies, but they are fixed and will never increase. These policies also include a cash value component that builds up equity over time with a portion of each premium that’s paid. You can borrow or withdraw these funds at any time. Whole life insurance may be best for those looking to offset estate taxes or who need to make sure a disabled dependent is financially provided for.

Term Life Insurance

A term life policy is the simplest form of life insurance coverage. It is designed to last for a specified number of years, and if you should pass away within that timeframe, death benefits will be paid out to your beneficiaries according to the face value of the policy. Term life insurance is generally the most cost-effective choice, as a large amount of coverage can be purchased at a low rate, but premiums can increase upon renewal. Unlike whole life insurance, term policies don’t hold any cash value. This is usually best for those who are concerned about paying off a mortgage, leaving money to help with the cost of a child’s higher education and supporting their loved ones if an untimely death occurs.

 

Once you have clarity on the differences between whole and term life insurance, you will be able to make an informed buying decision. Serving residents in and around Chattanooga, TN, New York Life – Ryan Frame is available to go over each option in more depth and advise you on which policy would be most beneficial for your situation. Since 1845, clients have entrusted the company to help them plan for the future and protect their family’s well-being. Call (256) 683-6967 to schedule an appointment, or visit him online to learn more about the products offered.

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