Which type of policy, term or whole life, is best for you? The answer depends on a number of things, such as:
Your Needs. For example, if you only need insurance until your kids finish college, you might be better off with a term life policy.
Cash-value insurance is better for long-term needs, like planning for estate taxes and making sure your spouse is taken care of for life. Some term policies can't be renewed after you turn 70 or 80, and as you get closer to that age, it can cost more to renew them.
The Price. If you can only afford term life insurance but want coverage for life, you could get a policy that can be changed into a whole life policy. Then, you can change the policy whenever your budget or needs tell you to. You can also buy both term life insurance and permanent life insurance and switch over to permanent life insurance over time.
Your goals for saving money and making money. Whole life insurance can be a good long-term investment because the cash value can grow without having to pay taxes on it. If you no longer need the insurance but would like some extra cash, you can give up the policy and get the cash value it has built up. Talk to your tax advisor first about what this will mean for your taxes.
You could also buy term life insurance and put the money you save on premiums into your own investments. Compare the returns you can expect and don't forget to think about taxes if you plan to choose investments that will be taxed.
So, Should I Get Whole Life Insurance or Term Life Insurance? Both term life insurance and whole life insurance have benefits, like protecting your family. It takes careful thought and, most of the time, a clear look at your financial plan to figure out what kind of policy and what features are best for you. Contact a financial professional to talk about your life insurance needs and other financial needs.
