Whole life insurance provides lifelong protection and accumulates cash value over time. It generally provides a guaranteed premium, death benefit, and cash value component that collects tax-deferred with potential dividends. On the other hand, term life insurance is often the most affordable way for individuals to get high levels of coverage for a specific period (typically 10, 20, or 30 years). Since we get asked a lot, here are a few more differences from the Senn Insurance Agency.
The primary difference between whole life insurance and term life insurance lies in their duration. At the same time, you can have a whole life policy in force your entire lifetime—so long as you continue to make payments—term policies are much shorter in duration. The primary purpose of term life insurance is financial protection. Therefore, if you die during your policy term, the insurance company pays a death benefit to your beneficiaries. After the term expires, coverage ends, and there is no death benefit payable.
Whole life policies are more expensive than term life policies because they offer more features, such as investment options for cash value accumulation and guaranteed renewability for life—meaning you can’t be denied a renewal even if your health has changed.
On the other hand, term life insurance can be a great choice if you only need coverage for a specific period. The premiums are much lower compared to whole life because it does not have the cash value component or guaranteed renewability feature. Moreover, term life insurance is often seen as a way for individuals who don’t want or can’t afford the higher premium costs associated with whole life policies to get coverage that will provide financial security for their families.
For more information, give us at Senn Insurance Agency a call today. We serve the O’Fallon, MO area.