In this regard, there are two major types of life insurance policies. They are term life insurance and permanent life insurance. The most straightforward kind of permanent life insurance policy is whole life insurance. Due to the similarities it has with term life insurance, people often take one for the other. So, we will explain what the differences are.
Term Life Insurance
As implemented by Bryan Insurance Agency, LLC, located in New Windsor, NY, term life insurance involves the payment of an agreed death benefit during a stipulated term, when the policyholder dies within the term. When the term lapses, it can be renewed for another term, terminated, or converted to permanent coverage.
Whole Life Insurance
This is a permanent life insurance policy that provides lifelong coverage. For this policy, the cash value account grows at a stipulated rate. Also, when you purchase the policy, the death benefit is guaranteed, and the premium remains the same as long as you are alive.
Their Similarities
- For both insurance policies, their premiums generally remain the same.
- The second similarity is that a life insurance payout is guaranteed for both of them.
- They are both straightforward and simple to understand.
Their Differences
- A whole life insurance policy is usually more expensive than a term life insurance policy.
- Term life insurance (TLI) offers a choice of policy length, while that is not known in a whole life insurance plan (WLI).
- WLI provides lifelong coverage, while TLI doesn’t. Its term can expire before the death of the policyholder.
- The premium of TLI is generally lower.
- The cash value for WLI accumulates while that of TLI does not.
Conclusively, both of them have their advantages and disadvantages, so you can’t say one is better than the other. You only need to check their features and choose the one that suits you best. For more information, contact Bryan Insurance Agency, LLC in New Windsor, NY.