Life insurance offers many advantages, particularly for the financial protection of your beneficiaries and their future needs. There are two main types—whole and term—and you should understand the differences to select the right one. Below is more information about each type of policy to help you decide.

Whole Life

As the name suggests, whole life insurance covers you for the duration of your life. Although they have higher premiums at first, these policies can save you money as you age.

These policies provide death benefits and are excellent when estate planning. Most people need a health examination for the best rates, but you can purchase a policy without an exam at higher premiums.

Whole policies also have a cash value accumulation that will build for the duration of the policyholder’s life. This value often takes about 12 to 15 years to grow into a significant amount. You may borrow a portion of the coverage’s cash value during the life of the policy, as well.

A primary benefit of a whole life policy is that as long as you are paying the premiums, you have coverage and there is no expiration date. The cash value feature also acts like an investment that accumulates over time. A portion of the premium goes into a tax-deferred savings account that grows with interest. When your financial standing is complex or unstable, whole life insurance can cover estate taxes, which means beneficiaries receive more in their inheritance.

Term Life

Term life insurance only covers death benefits, meaning the insurance agency only pays the benefits if you die while the policy is active. You would purchase policies based on terms, which are year increments such as 10, 15, or 30. The policy will expire when you reach the term limit unless you renew it for another period.

This type of policy is easy to maintain and much more affordable than whole life insurance, but it does increase in cost the older you get. Term policies can also add temporary coverage to a permanent policy.

Term life is often a choice for those who have other ways of building wealth and do not need the financial security that a whole life policy would offer. You can also cancel your policy before its expiration without risking the value. Younger individuals with small children often choose term life to cover the expenses of an untimely death.

When you need help deciding on the right life insurance policy, Hummel & Plum Insurance Agency can help. Since 1904, the insurance agency has been offering individuals and businesses in Chillicothe, OH, customized options for home and car insurance, as well as policies for commercial properties and farms. Call (740) 773-1620 for a quote. Learn more about their services online.