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.
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Life Insurance at 65 Years Old
At 60 years old you are approaching retirement or maybe you’ve retired already. At his age your needs for life insurance are very different than when you were in your 30s, 40s, and 50s. You might be thinking about your children and grandchildren and wondering what you are going to leave behind for them. Or maybe you just want to have enough life insurance coverage to cover your final expenses so you won’t be a burden on your family members. Either way, you still have many options for life insurance at 60 years old.
As you know, life insurance costs more as you get older. You can still qualify for a term life insurance policy at 60. In fact, many carriers will offer up to a 25 year term policy for a healthy 60 year old. That means you’ll have life insurance coverage until you are 85 years old. A 60 year old male will pay about $1600 per year for a $150,000 20 year term policy. A 60 year old female will pay around $1200 per year.
If you have some health issues or you just want enough life insurance to cover your final expenses, then you should consider a simplified issue whole life policy. Simplified issue means that you don’t have to go through a medical exam. The application is basically a set of yes or no health questions. These policies are available for ages 50 to 85 and the face values range from $3,000 to $50,000.
For example, a 60 year old female will pay about $80 per month for $25,000 worth of whole life and a 60 year old male will pay around $100 per month. The advantage of whole life insurance at age 60 is that it’s permanent insurance and your rates will remain level for life.
To get the absolute lowest rates for your particular situation, make sure you speak with an experienced agent who works with multiple highly rated carriers. He or she will take into account your age, health status, family health history, and more before recommending the best carrier. Get a free quote today to compare multiple rates from top carriers.
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When you’re shopping around for life insurance coverage there is one big decision that you have to make before you look for quotes- which type of life insurance is right for you? There are several options, but the most common types of life insurance available are term life insurance and whole life insurance. Term life insurance is temporary life insurance because it lasts for a certain time, or term. Whole life insurance is permanent insurance that will last for your lifetime. They are very different forms of life insurance coverage. Term life insurance is more affordable, which is the reason why most people opt for this type of coverage.
What are the Advantages of Term Life Insurance?
• Very low cost compared to whole life insurance.
• Large amount of protection can be purchased at affordable rates.
• Option to choose from many different terms or periods of coverage – 1, 5, 10, 15, 20, or 30 years.
• Best choice for temporary protection needs, such as your mortgage, college tuition, or a car loan.
What are the Disadvantages of Term Life Insurance?
• Premiums increase at each renewal (the older you are, the more it costs).
• Term insurance does not build cash value.
• Coverage ends when your policy term expires.
Although term life insurance only offers coverage for a term, the benefit is that it is very affordable. You can adequately protect your family during the years when you need the most insurance. For example, if you are 35 years old, married with children, and you have a mortgage then you will probably want to have a large amount of life insurance. You should have enough to pay off your mortgage and other debts, pay for your children’s college tuition, and replace your income for the next 10, 15, or 20 years. You can get a $2,000,000 thirty year term life policy for about $1800 per year if you’re male and $1400 per year if you’re female. That’s a lot of insurance coverage for a reasonable amount of money. If you were to choose whole life you would easily pay 3 to 4 times as much for the same amount of coverage.At the end of 30 years, your obligations will be much less so you can opt for a much smaller insurance policy.
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.
