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How to Decide Between Whole or Term Life Insurance

Life insurance is a big decision for anyone considering their coverage options. A life insurance policy is such an important safety measure for young families, retirees, and everyone in between. Sadly, many consumers don’t yet grasp the crucial nature of the coverage that a life insurance policy provides them and their family members.

If you are grappling with a life insurance policy decision, you’ve likely come to the stumbling block that is the question of whether to purchase whole or term life insurance. The premium and coverage structure is largely the same for both options, but there is a crucial difference in the coverage period that requires some considered thought before proceeding.

This article seeks to clarify the use cases and differences between these primary options for securing a more stable future for your family members and beneficiaries in the event of an untimely loss of life.

Why should you purchase life insurance, anyway?

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Life insurance coverage is a must for individuals and families of all walks of life. Insurance companies provide an unmatched safety net for policyholders, and your choice of policy type is often largely dependent on the circumstances you currently find yourself in (and expect for your future).

The most important feature of life insurance coverage is the hedge against an unexpected loss of income or expansive debt. The death benefit from a life insurance policy can help your family to navigate the financial uncertainty that lies ahead or pay off a mortgage, hospital bills, or other debts that you may still owe. Life insurance provides structure to your emotional health while planning end of life decisions as well. Without the uncertainty about how you may leave your family, many of the additional considerations about end-of-life planning are made far easier.

Term life insurance is great for a specified time period.

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As the name suggests, term life insurance covers you in the event of unexpected death during a specified term. Often, young families seek out term life insurance quotes to cover wage earners during the early years of their children’s development. Term life insurance provides coverage for a fixed period and is often a bit cheaper than the alternative. For families seeking financial coverage for this specific purpose, term life insurance is often a great option.

The truth is, raising children is expensive. The USDA estimates that childcare costs in the United States will add up to about $233,000 from birth to the age of seventeen on average. That’s almost $14,000 every year (averaged across the whole range) for each child in your family. Children aren’t cheap, and the expenses that come along with them aren’t optional. Children must go to school, eat, and receive new clothing regularly to keep up with the constant state of growth that they experience.

In the event of a parent’s death, you may question the finances to keep up with these needs. Term life insurance covering the period in which your children are completely dependent upon you and your earnings is a great way to introduce a powerful peace of mind.

Whole life insurance is great for older adults seeking to reduce the caustic effect of debt.

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Older adults face the potential for significant expenses as they continue to age. Many elderly Americans find that a trip to the hospital is unavoidable in old age due to the same injuries or bumps and bruises that would have been laugh-inducing just a few years prior. Health care, hospice needs, and other medical care requirements can quickly become expensive. Debts resulting from chance encounters with the healthcare industry can eat away at your savings and your estate.

Taking out a whole life insurance policy guarantees your beneficiaries a sizable death benefit that can add to the estate you will leave behind – and this will happen whether you live to 112 or pass away suddenly next year. Negating any unexpected bills and boosting the inheritance you will leave behind is the primary use case for whole life insurance. It’s a great way to get ahead of any unexpected bumps in the road.

Life insurance is crucial for families of all varieties. Make sure you pick the policy that works for your needs.