What Type of Life Insurance Is Right for You? Term vs. Whole Life Explained

Life insurance is a financial tool that may provide funds to your loved ones after your death. It can help address major expenses, pay down debts, or support your family’s long-term financial goals.

How Term Life Insurance Works

Term life insurance may cover the insured for a set period, such as 10, 20 or 30 years. Premiums are generally lower than those for permanent policies because the coverage lasts only for a specific time. If the insured person dies during that period, the beneficiaries may claim a payout. Once the term ends, the policy usually expires unless renewed at higher rates or converted to a different type of policy.

How Whole Life Insurance Works

Whole life insurance may provide lifetime coverage if premiums are paid. This type of policy can also build cash value over time, which grows at a steady rate set by the insurer. Premiums remain level throughout the policy’s life. Some people use whole life insurance as part of long-term financial planning, since the cash value can eventually be accessed through loans or withdrawals. It generally costs more than term life policies due to its lifetime duration and savings component.

Cost Comparison

Life insurance rates often vary based on age, health, lifestyle and the amount of coverage selected. Younger applicants and nonsmokers typically receive lower rates. Between term and whole life insurance, term life usually requires lower monthly payments because it is designed for a limited period with no cash value, while whole life offers lifetime coverage and savings growth.

Reach Out Today

If you live in Smyrna, TN and would like guidance on selecting life insurance, Raborn Insurance Agency is ready to help. Contact our team today to compare policies, discuss pricing and choose suitable coverage.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.