Choosing Between Whole Or Term Life Insurance

Choosing Between Whole Or Term Life Insurance

When you opt to have a life insurance policy, you are helping to ensure that your loved ones are well taken care of when you are gone. When a life insurance policy holder dies, family members and other beneficiaries will receive a payout which is not usually subjected to income tax. If you are interested in better understanding your life insurance policy options in San Diego, California, Windfall Insurance Services Inc. can help. Continue reading to learn more about the differences between whole and term life insurance.

Whole and Term Life Insurance: Essential Information

1049 (2)The two most common types of life insurance are whole and term life insurance. The primary difference between the two types is the cost and the length of the policy, and the type of policy that you choose will ultimately depend on your personal coverage needs. The beneficiaries of a policy can spend the death benefit on anything they choose, for example, debt, funeral costs, college tuition, etc. Whole life insurance is intended to last for an entire lifetime and has a cash value amount, resulting in it being more expensive over time. Term insurance is likely to be less expensive, covering a specific amount of time rather than the duration of a lifetime, and paying out if the policyholder passes away during the term.

How Does Whole Life Insurance Work?

Whole term life insurance is a permanent life insurance and is intended to last throughout a borrower’s entire lifetime, paying out at the time the policyholder passes away. This type of insurance has an element of cash value that increases over time and consists of part of a premium to be paid into an account. A policyholder has the option to give up the policy for cash or borrow against the account once it has built up enough cash value. The cash value of the account will continue to increase at a fixed rate and the whole life insurance policy premiums will remain the same for however long the policyholder lives.

How Does Term Life Insurance Work?

In contrast to whole life insurance, term life insurance only lasts for a certain amount of time, (usually ranging between 10 and 30 years), and will be paid out to beneficiaries if the policyholder passes away during the selected term. If a policyholder outlives the term life insurance policy, or if policy expires, the appointed beneficiaries will not receive a payout. Term life insurance policies are often simpler and less expensive than a whole life insurance policy, and are beneficial if someone is looking to help out their family financially upon death. The total insurance costs and the benefit amount will typically stay the same throughout the term in this type of policy.

If you are interested in learning more about your life insurance options in San Diego, California, contact Windfall Insurance Services Inc. today for a consultation.

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Windfall Insurance Services Inc
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