Choosing the right life insurance can feel confusing, especially when deciding between term and whole life insurance. While both types offer protection, they work in different ways and serve different needs.
Term life insurance is the most common type because it is simple and affordable. It provides coverage for a specific number of years, such as 10, 20, or 30. If the policyholder passes away during the term, the beneficiaries receive a tax-free payout. This type of insurance is perfect for people who want high coverage at a low cost.
Whole life insurance, on the other hand, provides lifelong protection. As long as you continue paying the premiums, your family will receive a guaranteed payout no matter when you pass away. Another unique feature is cash value. Part of your premium goes into a savings component that grows over time. You can borrow against this value or use it as an investment.
Understanding your financial goals will help you choose the right type. If you want affordable protection for a specific period, term life is the best option. If you prefer lifelong coverage with long-term financial benefits, whole life insurance is the better choice.