Term life or whole life: How do I choose?

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Term life or whole life: How do I choose?

Life is full of choices. This is one you don’t have to make. If your employer or insurance provider offers term and whole life insurance, consider choosing both.

Why? Because the two main forms of life insurance — term and whole — serve different, complementary purposes. If you carry both during your working years, you’ll more fully protect your family from the costs that come at the end of life.

Here’s how:

Term life: for your working years

Term life is insurance you have for only a certain amount of time. People usually buy term life to last through their working years, when their income is paying all sorts of bills for the people they love — like the mortgage on the house, or school expenses for the kids.

Most people have a vision of the future they want for their families. If a breadwinner dies young, term life insurance can help make sure that vision can come true.

But term life coverage typically ends when you retire. At that point, your income is probably not so important to your family. The kids might be grown and supporting themselves. Your house might be paid off. Now you just need enough life insurance to pay your final expenses. That’s where whole life comes in.

Whole life: for your end-of-life costs

Most people don’t have enough money saved up to pay for things they might need at the end of life, like their funeral or the out-of-pocket medical costs they might run up during a long illness. For example, the typical U.S. funeral costs around $8,500. A whole life insurance policy can help pay for some of these costs, so your family doesn’t have to.

“Often for just a few dollars a week, you can ensure your family has enough life whole life insurance to cover final expenses,” said Annise Henson, product and market development manager for Unum. “Having enough whole life insurance to cover your final expenses can provide peace of mind for your family and ensure they don’t have to turn to crowdsourcing to pay for funeral expenses.”

Why you should buy whole life during your working years

Whole life is less expensive if you buy it while you’re young. Also, the premiums you pay can earn interest that you can use later in life. The earlier you start paying premiums, the more interest you can earn. So buying your whole life coverage while you’re still working can make a lot of sense, even if you already have term life.

Both term and whole life can be cheaper when you buy them at work. You might also consider purchasing a term life policy for your spouse, and whole life policies for your spouse and your kids — because even if you’re still working, unexpected funeral costs can be a burden you don’t need.

“A comprehensive life insurance package will include both term and whole life insurance,” Henson said. “Not all term life insurance can go with you when you change jobs, but whole life insurance is yours as long as you pay premiums.”

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