Life Insurance protects against unforeseen losses for those things that you have worked so hard to maintain and build.
We know that we will use life insurance at some point, but we do not know when that will be. Deciding whether you need an insurance plan for a specific period or permanent will be a crucial decision. Each type of insurance has benefits and costs that determine what makes the most sense for your particular situation. One of the unique benefits of insurance is that any proceeds from a death that goes directly to a designated beneficiary are completely tax-free.
Term Life Insurance
Term insurance is just what it says; insurance that lasts for a specific period. This type of insurance is a low-cost, high-benefit solution for specific periods. It can be used to protect debt obligations such as a mortgage or replace earning potential for loved ones while you are working. Term insurance is a temporary solution since it will only last for a specified period.
Whole Life Insurance
Whole life is a key component in any portfolio due to its conservative nature, growth and protection aspects.
Whole life is a permanent solution as long as the premiums are paid, it will never go away. It accumulates cash value and has two components: the death benefit and the living benefit. The death benefit is exactly like term insurance; in the event of death, a claim is paid, and the proceeds go to the beneficiary.
The one difference is that the insurance has no term, it will last as long as the premium is paid. The living benefit is unique to whole life insurance. With the cash accumulation, you can use that money for life needs such as education expenses, retirement planning, or anything else that you may need throughout your life. Whole life costs more than term insurance but has a more robust benefit structure and flexibility.
WORKSHEETS & ADDITIONAL INFORMATION
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