What is the Difference between Term Insurance and Whole Life Insurance?

There are so many different insurance products that can be taken advantage of to financially plan for your future and for the future of your children. The type of policy that you choose will differ depending on the stage you are at in life as well as your future financial goals. There are many different types of insurance; from life insurance to critical illness insurance and more. Many companies offer both whole life insurance and term insurance, but what is the real difference between these products?

Life insurance protects your family in the event that you pass. With that said, there are some life insurance policies that can serve as an investment vehicle and provide other benefits while you are alive.

Where life insurance is concerned, whole life insurance is a life insurance policy that remains in force for the insured's whole life whereas term life insurance is provided for a specified term which is usually 10 or 20 years. The advantages to whole life insurance coverage carry many benefits that include a level death benefit and level premium for life, the ability to add riders to cover additional needs, the policy never loses value, the ability to borrow against them if you need funds as well as a tax free benefit to the beneficiary. Term life insurance provides lower premiums than whole life insurance but does not carry a cash value and at the end of the term your premiums will increase if you wish to keep the coverage, or the policy expires usually around age 80 to 85.

Critical illness insurance protects you in the event that you suffer a critical illness like a heart attack and survive. Where critical illness insurance is concerned a term policy means the same thing as with life insurance. You are covered for the term of the policy. Permanent critical illness policies with a return of premiums rider present incredible value because if you don’t suffer a critical illness after a specified period of time you can receive 100% of your premiums returned to you. In this case, you can make a bet on having good health!

Determining the best insurance coverage will really depend on your age and goals. For example, an individual with no children may be better suited to a term life insurance policy. An individual who has young children will have different objectives and may be suited to a whole life insurance policy. This is because they will have a need to not only ensure that their children are protected in the event of death but also benefit from a policy that carries a cash value that they can leverage to plan for their children’s financial future.  Critical illness insurance has become very popular because advancements in medical treatments has resulted in higher survival rates amongst those who suffer a critical illness and if you are generally very healthy you may want to be eligible to get your premiums back if you don’t have a major health problem. A good insurance broker will be able to sit down with you to discuss all of your options and help you come up with the right plan for you.

If you would like more information about Term Insurance and Whole Insurance please contact Gary Mandel at 416-849-1653 or visit www.wecoveryou.ca