Hey {first_name} - What's the difference between
whole life and term life insurance and
which one should I have?

This is a very important question to answer when you're looking to buy life insurance.

Not knowing the difference and which one is best for your specific situation can be financially disastrous.

There are some major differences you need to be aware, so you choose the right insurance for you, your business, and your loved ones.

What is term life insurance?

Term life insurance provides coverage for a certain time period. If you have a term policy and die within the specified term (10, 20, or 30 years), your beneficiaries receive the payout. The policy does not build cash value like whole life does.

You choose the term length when you buy the policy. Common terms are 10, 20 and 30 years. With most policies, the payout (also called the death benefit) and the cost (premium) do not change throughout the term.

When you shop for term life:

• Choose a term length that covers the years when your business and loved ones would need the insurance the most.
• Buy an amount your family would need if you were no longer there to provide for them in addition to the expenses your business would need to cover.

Ideally, your need for life insurance will end around the time the term life policy expires: Your kids will be on their own, you’ll have paid off your house, and you’ll have plenty of money in savings to serve as a financial safety net.

What is whole life insurance?

Whole life insurance provides lifelong coverage and includes an investment component known as the policy’s cash value. The cash value grows slowly in a tax-deferred account, meaning you won’t pay taxes on its gains while they’re accumulating.

You can borrow money against the account or surrender the policy for cash. But if you don’t repay policy loans with interest, you’ll reduce your death benefit, and if you surrender the policy, you’ll no longer have coverage.

Although it’s more complicated than term life insurance, whole life is the most straightforward form of permanent life insurance. Here’s why:

• The premium remains the same for as long as you live.
• The death benefit is guaranteed.
• The cash value account grows at a guaranteed rate.

Choose Term Life Insurance if you:

• Only need life insurance to replace your income over a certain period of time while you're raising your kids, paying off your mortgage, growing your business, etc.
• Want the most affordable coverage.
• Think you might want permanent life insurance but can’t afford it. Most term life policies are convertible to permanent coverage.

Choose whole life if you:

• Want to provide money for your heirs to pay inheritance or estate taxes. 
• Have a lifelong dependent, such as a child with disabilities. Life insurance can fund a trust to provide care for your child after you’re gone. 
• Want to spend retirement savings and still leave an inheritance or money for final expenses, such as funeral costs.
• Want to equalize inheritances. If you plan to leave your business or property to one child, whole life insurance could compensate other children.

These are the main differences between term and whole life insurance.

Understanding the differences will play a significant role in helping you decide which one is best for your situation.

I hope this has helped and if you would like assistance with determining which one is best for you, click the button below to request your Custom Business Life Insurance Plan.
 

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