Choosing the right life insurance policy is important. Understanding the difference between term and whole life insurance is a valuable part of the decision. At Aflac, we offer a variety of life insurance plans to help meet your specific needs.
According to LIMRA, 52% of Americans reported owning some type of life insurance in January 2023. This included individual life insurance, employer-sponsored coverage, etc.1 Picking the right life insurance policy can greatly impact your retirement plan and your family’s financial security.
What is Term Life Insurance?
When deciding between term or whole life insurance, there are crucial differences to take note of. Like it sounds, term life insurance provides coverage for a set term or specific amount of time. They usually vary between 10 and 30 years long. If the policyholder passes away during that specified period, your beneficiary will receive the payout.
The cost of whole life insurance vs. term varies, but term life insurance usually costs less. It costs less because there is only a payout if the timing aligns. We hope that you outlive your term, but if not, the payout can help provide support for your loved ones.
You are also able to choose your term based on your unique situation, possibly reducing costs in the long run. This choice is popular for young families because of the lower premiums upfront. It can also be a good choice for seniors factoring in their long-term plans.
What is Whole Life Insurance?
When wondering, “should I buy term life insurance or whole life?” there are a few key takeaways. Whole life insurance provides coverage for your entire life cycle. Typically, whole life insurance costs more because it serves as an investment. This investment, otherwise known as the cash value, is able to grow throughout your lifetime tax-free.
When deciding between term or whole life insurance, you should note the following about whole life insurance. The premiums will not change throughout the course of your life and the death benefit is certain. You do not need to choose a term length. Lastly, the cash value will grow in a tax-deferred account at a secured rate. This is a popular choice for those looking to maximize their financial potential.
