Is Term Life Insurance Right for You?

According to a recent study done by LIMRA’s Life Insurance Barometer, roughly 85 percent of people in this country believe that they need at least some form of life insurance coverage and yet, only 62 percent actually have it. But then the question becomes, what form of life insurance is right for you and your family and could it be term life insurance?

Life insurance, by nature, has been designed to act as a financial safety net for your family in the event of your death. But when researching the differences between whole and term life insurance policies, the options can seem confusing.

What is the difference between Term Life and Whole Life Insurance?

When most people think about life insurance, they are more than likely thinking about whole life insurance. Unlike term life, whole (or permanent) life insurance is for your entire life span or up to age 100 in some cases, whereas term life is designed to provide coverage for a pre-specified period of time often ranging anywhere from 1 to forty years.

Cost is another key difference between the two policies. While most whole life insurance policies tend to have a higher premium from the start, many times your rate will not go up. Term life insurance, on the other hand, determines premiums based on the age of the policyholder, therefore a policyholder in their forties, for example, would have a higher premium than an individual in their twenties.

Whole life insurance also accumulates a cash value over time that grows at a guaranteed rate and is tax deferred. As the policyholder, you are able to borrow against the policy but you must be ready to pay the money back with interest. This is a feature of whole life insurance that term life does not offer.

Why Term Life May Be Right For You

While term life insurance might not be right for everyone, it may end up being a better fit for you, your budget, and your family when compared to whole life insurance.

Due to the fact that term life policies tend to be less costly overall (especially for those in younger age brackets), they might make more sense for new or growing families. Many who opt for a term life policy are entry to mid-level in their careers and may not have the kind of saving habits or capabilities to cover their family or debts in the event of an early death.

With a term life policy, your payout benefits could give your family and dependents the financial support they would need to not only pay for funeral expenses, but also supplement the loss of your income, and help put your children through college in the event of your death.

As term life policies generally provide you with coverage for a pre-specified period of time, once your term of coverage is over, the policyholder would then need to renew their current policy at higher rates or seek out a new life insurance policy should they wish to maintain their coverage.

Ultimately the decision between term life insurance and whole life insurance is a personal one and should be discussed with your family, agent, or both. When you truly examine your finances and current situation, you may find that a term life insurance policy would be a better fit for you in the long run and save you money in the short-term.

Are you ready to learn more about the Term Life policies that are available to you? Visit www.ficpa.memberbenefits.com/term-life-insurance/ for more information, or contact us to speak with a benefits counselor who can assist you.