Life insurance is a valuable asset you can leave behind to your family in the event of your death. If you have young children at home, you might invest in a term life policy on yourself to protect the financial future of your family. As you get older, a term life policy might not make as much sense. When you have a little more income every month, a whole life policy tends to be a better investment. A term life policy has an end date, and you would need to purchase a new policy if you live beyond the terms of the agreement. A whole life policy is for life, and as long as your premiums are paid, your beneficiaries get a set amount at the time of your death.
Your Typical Whole Life Insurance Policy
You pay a premium every month for a set amount of life insurance coverage. When the policy is a whole life one, you are going to pay a higher monthly cost than if you purchased a term life policy with the same payout amount. The whole life policy will accrue value, while a term life policy does not. As the cash value builds up, you can access the balance as a type of loan. You'll pay back the loan on your policy, but it's a great way to get cash when you need it.
Paying for Your Whole Life Insurance
You have choices in how you pay for your whole life insurance. If you have the money, you can pay one lump sum to purchase such a policy. You can also agree to pay a set monthly amount throughout your life. Another option is to pay for a set number of years, while being covered for the entirety of your life. When you have limited funds, paying a set monthly fee throughout your life is usually the least expensive option.
Consider What You Want to Leave Behind
If you have a family with small children, you will want to consider the financial stability of your family if you suddenly pass away. A higher payout amount will come with a higher monthly premium, so you will have to find a balance between what you can afford and what your family would need for financial security. Talk to your insurance agency about the various types of life insurance and think about how you can meet the needs of your family with a whole life insurance policy.