If you already have a Term Life insurance policy and want to convert it to a Whole Life policy or don’t know the first thing about Whole Life, we are here to help. Whole Life is quite different from Term Life. With Term Life insurance, you get a large death benefit for cheap premiums, but you will have no guaranteed death benefit. Should you outlive the “term” of the policy, your beneficiaries receive nothing.
That’s why Whole Life insurance is so appealing. You get a guaranteed death benefit and the value of the policy can increase over time. It doesn’t matter if you live to be 100, your beneficiaries will receive money after you pass if you have a Whole Life insurance policy in effect. This isn’t the case with Term Life.
Whole Life insurance premiums cost more than Term Life, but you are getting more bang for your buck with Whole Life. There are two parts to a Whole Life policy. The first part is the death benefit. The second part is a savings component which accumulates a cash value over time.
Similarities and Differences in Whole Life and Term Life Policies
Whole Life and Term Life are as different as they are similar. The main similarity is both provide exceptional coverage to beneficiaries. The main difference is Term Life isn’t guaranteed to pay out that death benefit, whereas Whole Life is. If the insured outlives the Term Life policy, the beneficiaries receive nothing, but that can’t happen with a Whole Life policy.
Another difference is the cost. Whole Life is more expensive than Term Life. Getting insurance on the cheap, which is what you’ll get with a Term Life plan, comes with risk. Whole Life is guaranteed insurance. So even though you’ll pay more, you won’t have to risk leaving your loved ones with nothing after you’re gone.
Think of it this way. If you have Term Life insurance and remain with that policy forever, what will you do if you outlive the policy? And don’t you want to outlive the policy? We all want to live a long and healthy, happy life. But if you don’t convert your Term Life policy into a Whole Life policy at some point, you will be left having to decide if you want to live into your 80’s or leave behind nothing.
That’s the biggest benefit of Whole Life insurance. You can live well into your 80’s and 90’s without worrying about leaving money for your loved ones. No one wants that to happen. Another benefit to Whole Life is getting to cash it out before death in the event that you have a serious need for money. You can’t do that with Term Life. However, you should avoid cashing your policy in, if at all possible.