Advantages of Whole Life over Term

Understanding the difference between whole life insurance and term insurance is key to making a good decision about your life insurance needs. Many experts will tell you that the policy type that is best for you depends on a variety of situations in your life, and that research is important in determining if you should choose term or whole life.

Term Policies

Term life insurance generally has one advantage over whole life insurance policies - they are less expensive - in the short-term. This is because whole life insurance policies also come with a cash savings account that you pay into as you make the premium payments for the insurance each month. This account grows tax-free for as long as you pay into it and the money may be withdrawn at a later date after certain conditions are met. A term life insurance policy ends after the specified term, forcing you to either be one of the extremely rare, independently wealthy individuals who no longer need life insurance any longer, or to renew your policy under new terms and likely a higher rate due to your age.

Whole Life Policy Benefits

The primary advantages of a whole life policy over a term policy are the peace of mind that comes with knowing you are covered at all times at the same rate and no worries about rising premiums, and the many advantages of the savings account that comes with a whole life policy. After you get your cheap whole life insurance quotes and choose your policy you can look forward to taking advantage of:

• Tax-sheltered savings: As you make your monthly life insurance payments, part of your payment is automatically used to fund a cash value account that grows tax deferred. This cash value can be used to draw loans from in the future for yourself if needed.
• Affordable premiums year after year: You can have the peace of mind of knowing that you will not have to pay increasingly higher premiums year after year with a whole life policy. If you get the policy while you are relatively young, the premiums may be higher than a term policy for a short period of time, but in 40 years, when that term policy has been renewed several times and you are older, your premiums will have remained the same and the term policy renewal will be significantly higher.
• Freedom from premium payments: After your cash value has generated enough money and the interest payments to the account are sufficient, you can actually stop making payments to your life insurance policy (and it will remain active), drawing off of the cash value insurance's tax increases to make the premium payments for you for as long as you wish - even the rest of your life.