Whole & Term Life Insurance

What is Whole Life Insurance

Whole life insurance is a type of permanent life insurance that provides coverage for your entire life and it has a cash value that earns interest over time.  Whole life pays a tax-free benefit to your beneficiary upon death.  Rates are determined by your age, medical history, and coverage goals. Payments can be structured to be monthly, quarterly, or biannually.  Single premium whole life insurance policies allow you to fund the policy with one large initial premium lump sum payment. 

Benefits of Whole & Term Life Insurance

Doesn’t expire (Requires premiums to be paid or cash value to cover your premiums)
Accrues a cash value while you’re still alive (cash value in your policy is tax deferred)
Can borrow against cash value
Can offer a guaranteed rate of return
Can offer dividend from a mutual insurance company

Disadvantages of Whole & Term Life Insurance

Costs more than term life insurance
May require a medical exam for higher coverage amounts
Whole life insurance offers lower returns that other investment options

pros cons term life versus whole life insurance
benefits of term life insurance

What is Term Life Insurance

Term life insurance policies are just as their name suggests, for a set period or term.  Typically term life policies are for 10 to 30 years unlike whole life policies that never expire.  Reasons for purchasing these types of policies include paying down a mortgage, sending your children to college, or providing a death benefit for loved ones. 

Benefits of Term Life Insurance

Less expensive than whole life insurance
Can be structured to convert to a whole life insurance policy
Guaranteed premiums
Straightforward to understand
Policies without medical examinations

Disadvantages of Term Life Insurance

No cash value
Lasts only for a set period of time
Cannot be used to borrow against
No annual dividend

For estate planning purposes, please contact us to discuss how you can use a Life Insurance Trust (ILIT) to reduce your estate tax.  A Life Insurance Trust requires a grantor, trustee, and a beneficiary.  Setting up an ILIT can keep the death benefit separated from your estate value, protecting it from additional taxes.

Keen Coverage

It is our job to shop multiple insurers on your behalf. We will invest the time to get to know you and your family’s background so that we can offer a full insurance plan.  This includes health, life insurance, long term care, disability, business, and surety policies.