Whats the difference between whole life insurance and a term policy?
A term life insurance policy is one that entitles the beneficiary to a payment of the policy amount in the event of the insured’s death, provided that the premium payments are up to date. Term policies usually have yearly payments, meaning that one payment entitles you to coverage for a year. By contrast, a whole policy works more like an investment product, with the premiums turning into accumulated value, and the policy having a cash surrender value even if the insured is still alive. Essentially, the difference between the two is a little like the difference between owning your home and simply renting. While it’s always better to own than rent, the main drawback of a whole life policy is the cost because you’re literally paying premiums so as to reach the policy value. By contrast, a term policy is like a bet that the insurance company makes on you, namely that they can collect their premiums and not have to pay that year. If you can afford whole life insurance, by all means, go for
