When it comes to life insurance, there are two main types: term and whole life. Term life insurance is pure insurance protection; you pay a premium for a set amount of time and, if you die during that time, your beneficiary receives a death benefit. Whole life insurance combines insurance with an investment account, and the premiums are usually higher than for term life insurance.
Whole life insurance can also be a good choice for estate planning purposes. If you want to make sure your heirs will receive a certain amount of money from your estate, you can purchase a whole life insurance policy and name them as the beneficiary. The death benefit is paid out tax-free, so it’s a good way to provide tax-advantaged savings for your heirs.
So which is better: term or whole life insurance? The answer depends on your needs and goals. If you just need coverage for a specific period of time, like until your children finish college, then term life is a good option. It’s also a good choice if you want to be sure your family will have some money to live on if something happens to you, since the death benefit is paid out immediately. whole life insurance is a good option if you want to build savings as well as have life insurance protection; the premiums are usually lower than for term life insurance if you keep the policy for a long time. Plus, the investment account grows tax-free.
Whole life insurance can also be a good choice for estate planning purposes. If you want to make sure your heirs will receive a certain amount of money from your estate, you can purchase a whole life insurance policy and name them as the beneficiary. The death benefit is paid out tax-free, so it’s a good way to provide tax-advantaged savings for your heirs.
