Find Peace of Mind for Your Family with Kent A. Bennett Associates Inc.
How to choose between term and whole life insurance is our blog topic this month. Nobody likes to think about using life insurance, but it’s something each person should have. Since the industry offers two choices—term life insurance and whole life insurance—it’s often difficult to choose between them. At Kent A. Bennett Associates Inc., we can explain:
- The way term life insurance and whole life insurance work
- How loved ones receive life insurance death benefits
Term Life Insurance and Whole Life Insurance Differ with Equal Results
Life insurance was designed to provide for families—beneficiaries—when the predominant wage earner passes away. Over time, the primary use of life insurance has trended towards beneficiaries using death benefits to pay for final expenses. While varieties of life insurance options exist, they ultimately fall under two categories: term life insurance and whole life insurance.
Term Life Insurance
Term life insurance covers the policy holder for a fixed increment of time. Most companies offer policies for 10-year, 15-year, 20-year, 25-year, and 30-year terms. Term life insurance pays a death benefit if the policy holder passes away during the designated term. Should the policy holder outlive the term, the coverage ends and the listed beneficiaries don’t receive the death benefit. Sometimes term life insurance can be converted to permanent, or whole, life insurance.
Whole Life Insurance
Whole life insurance is also known as permanent life insurance. It provides lifelong coverage and pays a death benefit regardless of when the policy holder dies. Whole life insurance usually includes an investment element known as a cash-value account.
How Do Whole Life Insurance and Term Life Insurance Compare?
Though both whole life insurance and term life insurance ultimately provide a death benefit to beneficiaries, they’re certainly different. Term life insurance has less expensive premiums, but whole life insurance doesn’t have an expiration date, or term. Whole life insurance cash-value accounts also serve as an investment vehicle, but term life insurance allows for other, diversified investments.
With Life Insurance, Beneficiaries Receive Death Benefits in Many Ways
When a life insurance policy holder passes away, death benefits aren’t automatically paid out. One of the beneficiaries must file a claim with supporting evidence to process the death benefit payout. Policy holders predetermine how the death benefit gets paid out to beneficiaries. Traditionally, beneficiaries receive lump-sum death benefit payments. Sometimes policy holder estates distribute larger, whole life insurance amounts via installment-payouts, or annuity death benefits. Other times, beneficiaries of whole life insurance receive checkbooks, with the insurance company acting as a financial institution.
For more information about insurance, call Kent A. Bennett Associates Inc. Inc at (800) 548-9119. Follow us on Facebook for updates. We are happy to discuss more about how to choose between term and whole life insurance.
