What Is The Difference Between Whole Life Insurance And Term Life Insurance?

15 March 2022
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Life insurance is a way for you to take care of your family after you have passed away. Depending on how big your policy is, your family may only have money to bury you, but if you leave a larger policy, then your family will be taken care of for longer. When you are looking at what life insurance policy you want to go with, you need to make sure that you understand all the different terms and criteria that surround life insurance. There are two big terms that you really need to understand. One is term life, the other is whole life. Deciding if you want term or whole life insurance is probably the first decision you'll make when it comes to choosing your insurance. 

Term Life

When you get a term life insurance policy, you are picking a specific time period for your life insurance policy to be in force. For example, if you get a life insurance policy that has a five year term, then you will have insurance for the five years from the day that you signed your policy. After five years and one day, your policy is no longer in force. Your goal is to choose a term that is long enough that it will cover the rest of your life so that your family can get the benefits after you die. 

Whole Life

A whole life policy is different from a term life. Instead of an insurance policy that has a prearranged end date, a whole life insurance policy is good from the time your policy starts to the day that you die, as long as you continue to pay for the insurance policy that whole time. Often, insurance policies will take some time to go into effect, generally around 30 days. Another benefit of whole life insurance over term life insurance is that the whole life insurance will build up an amount that you can borrow from as long as your policy is active. If you die before you pay back the money you have borrowed against the benefit, that amount will be taken out of any settlement that will go to your family, so you need to be aware of that. 

If you are going to get life insurance, you want to make sure that you get the right policy for you and your needs. Knowing the differences between term life and whole life insurance policies will make that easier to do.