Term Vs Whole Life Insurance

Many people who are shopping for a life insurance policy are still confused by the difference between whole and term life! This is one fundamental thing to understand in order to purchase the right type of coverage. Lucky for us, it is actually pretty simple.

Permanent Policies

The first type of life insurance was whole life. Sometimes it is called straight or ordinary life. The name pretty much sums up one major difference between it and term. It will cover a person for their WHOLE LIFE as long as the policy is kept in force. There is no expiration date. Most of these policies do say they will remain in force until age 100, or some advanced age like that. At that time, they will pay out the death benefit even if the lucky insured person is still alive.

Whole life policies also can grow a cash value over time. This cash account may be useful too. It means it can be borrowed against, cashed in, or even used in settlement transactions. But of course, these permanent policies are more expensive than term.

Temporary Policies

Term, on the other hand, does have an end date. It may be 20 or 30 years in the future, but the policy will still end. It does not, in general, have any money value beyond pure insurance, and that is only while the policy is still in force. There are some hybrids or additional riders that can change this, but this is generally true.

Which Is Best – Whole or Term?

So you must decide which type of lfe insurance policy would be of more use to you! If you are just trying to cover yourself for a period of time, even if it is a few decades, you will find that term lfe is cheaper! If you want permanent protection, you need permanent coverage. 

 Sometimes you can have it all though. You may choose to buy a larger term policy for your current needs, and then purchase a smaller permanent policy to cover you during your retirement years. That way you won’t have to decide between term or permanent policies!

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Well, not to make a joke, but the best life insurance for seniors would be a policy that had been purchased and paid up long ago. I just mention this because if you are a younger, or even midde aged person, who is looking to cover your aging parents or grandparents, it might be a good time to look for a policy for yourself too!

The may disappoint you, but I cannot give one perfect answer to this question that will satisfy everybody. The best choice will depend upon important individual factors like your needs, budget, and expectations for a life policy. What I can do is outline some of the common options that older people choose.

Life Insurance For Seniors

• Final Expense For Seniors - These are also called burial or seniors life policies. It is simply whole life insurance with a modest death benefit, from $2,500 – $25,000. It is, as the common names implied, mostly intended to pay for funeral arrangements and burials. However, the cash belongs to the named beneficiaries so they can use it as they see fit. For example, let us say that Mr. Jones inherited $20,000 from his father’s burial policy. If he spends $10,000 on a funeral and other associated expenses, he is free to use the other $10,000 as he pleases. This way, Mr. Jone’s father had prepared to make sure his funeral got paid for, and he also got to leave something to his son. This can work out very well for older people with modest incomes and savings who are concerned about the cost of funerals, and who would also like to pass on a modest benefit to their heirs.
• Term Life For Older People – It gets a little tougher to find term policies as we get older, though I have seen some companies that offer to cover people up to age 75 if they are in reasonable health. It would be tough to find a 30 year term, but a 10 to 15 year policy may be on the market. Since term is cheaper, people can afford to purchase a higher face value. This may be a good choice for a fairly heathy senior who wants to buy higher value of coverage, but also who understand the policy will expire after the term is up. If Mr. Jones had purchase a 10 year term policy at 70 and survived it, he would be unlikely to be able to replace it.

So which one should you pick? If you have modest means, and would just like to make sure that your by burial and other final expenses can be covered, the smaller whole life policy may be a good choice. If you have a larger use for coverage, like for business or estate transfers, and you are in pretty good health, you may be able to find a term policy that will suit you better.

How To Find The Best Life Insurance

Our online quote forms make it quick and simple to run competitive life insurance quotes. You can compare multiple insurers with one free form. That way you will know which ones fit your budgets, your needs, and your expectations! Find out how much life insurance costs here.

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Are you planning for a secure retirement and eventual transfer of your estate to beneficiaries? You do not have to be very wealthy to plan for this. Let us look at one product that is becoming more noticed these days with advisors and people who are doing estate planning. It can help turn one amount of money into a larger estate to leave behind. This product  is called single premium whole life (SPLI).

Why Is SPLI Different?

The most obvious difference is that you make one large cash payment when your coverage begins. You are probably used to having a monthly bill! That one lump sum funds your coverage, and so you do not have any more payments to make.

So you see that you have given the insurer a certain amount of money. In return, they issue you a policy for a sum that is probably a few multiples of the original amount. Many people are using this product to fund their estate.

An Example To Explain Single Premium Life

Look at the example of a healthy 70 year old who retired from the public school system. Her savings and teachers pension enable her to live well. But she also has another $50,000 she inherited from her own parents. She could take this cash and fund an SPLI for, let us say, $200,000. This way she sets up a nice estate to pass on to her kids and grand kids.

The paragraph above is only meant to illustrate how this works. The amount of cash you would have, and the death benefit you could buy, depend upon different things. As with any other life insurance, your premium and coverage amount will depend upon age, health, etc.

Who Benefits from Single Premium Whole Life?

Would SPLI be something for you to think abuot? If you have some money, and would like to be sure you can leave more money to survivors, it may be something to think about. It works best if you are sure that you do not need that money to live on, especially in the next few years.

If you do have to cash out your policy early, you could lose some of the value to surrender charges and fees. There is usually some sort of term for these, and policies are different.

One other single premium life insurance advantage is the fact that this large payment will allow your policy to grow value fast. Have you seen normal policies where it may take 5 – 10 years to have a cash value? Once your policy has a cash value, you can use it to borrow against. You can also cash it out. So in addition to having coverage, you also have set up an emergecy fund for future use.

Another feature is the fact that many policies allow you to accelerate the death benefit in case of a terminal illness. This way, a person could use the money if they need it. Some also have provisions for withdrawing part of the cash value in case of nursing home confinement.

These policies are not for everybody. If you do not have a lump sum of money, you may be better off with a regular life insurance policy and monthly payments. You should also understand that SPLI may be treated differently by the IRS. And finally, if you think you may need to withdraw your money in a short time, it will probably not benefit you. Fees or surrender charges could reduce your actual cash quite a bit in the short term.

Are you interested? Look here to get Single Premium Life Insurance Explained.

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