There are two main types of life insurance- term life and whole life. Term life insurance is temporary insurance that will last for a certain amount of time, or term. Whole life is permanent insurance that builds cash value.

How does whole life insurance build cash value? Whole life insurance will last for your entire lifetime, as long as you continue to pay your premiums. The fixed premiums are higher than a term life policy and that’s because a portion of your premiums are invested by the carrier. You can look at it as a built in savings element or, as some people refer to it, “forced savings.”As you pay your premiums, your policy will build cash value. This cash value is tax deferred until you decide to withdraw or borrow against it. If you die, your beneficiaries receive the death benefit, which is the face amount of the policy.

If you withdraw your cash value without surrendering the policy, then you are essentially borrowing against your life insurance policy. The carrier will charge you a specified interest rate until the money is returned to the policy. Any money that is owed at the time of the insured’s death is subtracted from the death benefit.

Whole life cash value insurance has advantages and disadvantages. One advantage is that the premiums are level for life. A whole life policy also has the ability to build cash value, tax-deferred. A disadvantage is that it costs much more than term life insurance. You should weigh the pros and cons of whole life insurance for your particular situation. Be sure to speak with an experienced agent to determine which type of life insurance is best for you. Get some free quotes for term life and whole life to compare the difference in cost.

If you are currently shopping for life insurance then you have inevitably come to the part where you need to decide whether term life insurance of whole life insurance (permanent coverage) is right for you. You first need to decide how much life insurance you need, what your budget is, and whether you want coverage for the rest of your life, or for a specific term. Here are some of the difference between term life and permanent life insurance.

Price: Permanent life insurance costs more. In most cases, it’s a lot more. See below for reasons why it’s more expensive.

Coverage: Permanent life insurance is coverage that will last for your entire lifetime. Your premiums will never increase and your policy will never be canceled, as long as you continue to make your payments. Term life is insurance that lasts for a certain time period, or term, and then the policy will end or it can be renewed at the current (higher) rates.

Cash Value: Permanent life insurance costs more because a portion of your premium is set aside and invested. Over time, cash value builds up and grows on a tax-deferred basis. Term life insurance premiums pay for a death benefit only so there is no cash value.

I can comfortably say that term life insurance is adequate coverage 95% of the time. It is affordable and you can get more insurance coverage for your money. However, if you want permanent insurance coverage and you like the idea of “forced savings” then whole life insurance might be right for you. Make sure you know all of the ins and outs of your permanent life insurance policy because these policies can be complex and expensive. Get a free quote today and compare the difference in cost for whole life insurance and term life.

When you are looking to buy life insurance you first have to decide if you need term life or whole life. If you want permanent coverage with premiums that will never go up and a policy that will never be canceled (as long as you continue to pay), then permanent life insurance is best for you. Before you compare permanent insurance rates, you should learn a little bit more about what life insurance companies look at when they rate you.

Insurance carriers base your permanent insurance rates on a number of factors. The most obvious is your age. The older you are, the higher your premium is. Another factor that is heavily considered is whether or not you smoke. If you are a smoker, then expect to pay 3 to 4 times more for life insurance than a non-smoker. A third category that plays a major role in what premium you pay is your health status. This can mean a lot of things. Life insurance carriers want to know your height and weight, your blood pressure readings and cholesterol levels, as well as any health history you have. We’re talking about a history of cancer, heart attack, stroke, diabetes, and many other health conditions. If you have no health issues then you will most likely receive a preferred plus rating, while someone with high blood pressure or a history of diabetes might receive a standard rating or less.

One last thing that you should consider when you compare permanent insurance rates is the strength and rating of the life insurance carrier. A highly rated carrier is more likely to be around in the long run, which means your beneficiaries won’t have to worry about getting a death benefit if something happens to you. Get a free quote to compare multiple rates today.