Term and whole life policies are the first options you’ll encounter when shopping for life insurance. Each distributes a death benefit to your loved ones when you pass. It’s essential to understand their differences, so you select a plan that meets your needs. Below is a helpful guide to use along with your insurance agent’s guidance.

What Should You Understand About Life Insurance Policies?

Whole Plans

Whole life plans cover a person for their entire life. They’re also called “permanent” or “traditional” plans. These plans pay out a predetermined death benefit. They also include a savings account. Policyholders can contribute to the account and earn interest over the years. They can also take out loans against this cash value. Just know that outstanding balances are deducted from the death benefit upon passing.

Policyholders pay a fixed monthly premium until their passing. In exchange, payment is guaranteed.

Term Plans

Term life insurance, also called “pure,” guarantees payment during a predetermined period—usually 10-30 years. Insurance companies carefully assess your age, lifestyle, and health to determine the plan duration and payout. These plans don’t include a savings component, though monthly premiums are often lower than whole plans.

Which Is Right for You?

Many customers prefer whole life plans because they’re predictable. While they carry the highest premiums, policyholders know what they’ll pay and what will be paid out. Borrowing against the cash value is also convenient if you’re in a bind and need cash quickly. 

These plans are also popular because they usually don’t require a medical exam for clients aged 50 and younger. This makes them more accessible for people with recent health diagnoses or risk factors that could become life-threatening later in life.

Term plans are popular among younger people with children. Should they pass away, the plan pays out a large benefit that will cover the family’s needs for the foreseeable future. Customers also choose them as coverage while they build wealth. They may not need to renew once the plan expires. These policyholders will have saved enough money and gathered enough assets to cover their families if they pass.

Term plans are cheaper but less predictable. They often have an age limit—usually 80—and there’s no guarantee your plan will be renewed. You’ll also have to pass a medical exam. The insurer may not want to cover you if you’re in poor health. This is an example of when the whole life plans are best.

If you’re ready to explore life insurance further, contact Jenkins & Bevan Insurance of Lorain County, OH. These professionals have helped customers secure coverage since 1954. They’ll carefully walk you through available life, auto, and property insurance, and more to find the best plans for your needs and budget. Call their office at (440) 984-6771 to schedule a consultation and visit their website to learn about their business coverage.