When it comes to choosing a life insurance policy, there are many different things to consider. It is important to understand the differences between the most common types, term and whole life, before deciding which is right for you.
Term vs Whole Life
The basic difference between the two is that a term policy is life insurance only whereas whole life combines a term life policy with an investment component. With whole life insurance, the policy would eventually have a cash value, much like any other investment. While you can earn a return with whole life, there are far better ways to save for your retirement. The difference in premiums is significant, and term life insurance is significantly cheaper and generally provides a better value. Most financial experts agree that it is a good idea to keep your insurance and investments strictly separate.
20 Year Term Life Insurance Policies
Until recently, term life policies were usually only available in 10 or 15 year increments. Today, however, you can easily find 20 year term life insurance policies. A 20 year term life insurance policy is an ideal choice for many people, as it offers the chance to obtain coverage at a reasonable premium, while usually including the opportunity to upgrade your coverage amount at a future date. By choosing a 20 year term life policy, you are guaranteed level premiums for the first 20 years. In addition, you will be able to renew the policy with a higher premium at year 21, without having to provide evidence of good health.
If you need to purchase a set amount of life insurance, want to know in advance what your premiums will be each month, and don’t want to spend a lot of money, a term life policy is your best value. Decide how much coverage you need, and then shop around for the best rates.