Understanding life insurance types and the fine print of policies is literally a full time job. When you are out there searching for a policy that fits you and your needs, the last thing you want to do is be scrolling through fine print and attempting to compare all the products out there. So, if you want whole life insurance explained, you’ve come to the right place. Here will discuss the basics of whole life insurance and term vs whole life insurance, so that you can see the differences.

Whole Life Insurance

Whole life insurance policies will provide you with life insurance for your entire life without lapsing, so long as you pay your premiums. Once you activate your policy you are covered until death, with an upfront, guaranteed benefit that will be paid to your beneficiary. Whole life comes with more expensive premiums because of the nature and breadth of the coverage, but your monthly premium will never change, so it’s an expense you can easily plan for. Whole life insurance policies also have a cash value feature, which also has an impact on the cost of premiums. Essentially, part of your premium covers your insurance costs and the other portion goes into a savings account, which you can borrow against later on.

Term vs Whole Life Insurance

These are two very different types of coverage, in fact everything about them is different, starting with the rates. Term insurance offers much cheaper premiums because the insurance company only has to provide insurance to you for the amount of time dictated by the policy (5 years, 10 years, etc.), which allows them much less accountability when compared to whole life policies. In a whole life policy, the insurance provider will have to pay your beneficiary eventually, no matter what. In a term policy the insurer only has to pay your beneficiary if you die within the term of the policy. Once that term is up you have to renew coverage, find a new policy, or go without.

Term policies are also cheaper because they don’t come with savings features and if you want really good term coverage, you usually have to submit to and pass a medical exam and answer medical questionnaires. If you lie on the questionnaire it can void your policy or give the insurer leverage against paying out your beneficiary in the event of your death. These medical requirements will have to be met each time you renew a traditional term policy, and as you can imagine, the older you get the harder it is to pass the exam. So chances are as you age you will qualify for less coverage, or be forced to pay higher premiums. With whole life policies you don’t have to renew anything and your premiums stay the same.

There are major considerations to undertake with any type of policy. It’s important to have good coverage, it’s important that your premiums are affordable for you (because if you miss a payment your coverage could lapse) and it’s important that you understand the requirements of your coverage. Whole life insurance can be a bit more on the complicated end of policies because of its extra features, so it’s important that you discuss your policy options with a professional before you choose one.

Getting whole life insurance explained to you, in detail, isn’t difficult if you speak to an insurance broker. While we’ve simply gone over the basics here, each insurance provider will offer slightly different features or have different requirements for their insurance products. Discussing specific policies one-on-one with an insurance broker is essential.

Author's Bio: 

For more info on whole life insurance visit LSM Insurance website