Whole Life vs. Term Life Insurance In Denver - How To Choose

Tuesday, 25 May 2021 11:41

Everyone understands the importance of life insurance: it helps protect your family from financial hardship. However, it might not be clear what type of policy is best for your needs. Should you purchase a whole life insurance policy? Or would it be wiser to acquire term life insurance in Denver instead?

It's important to consider both options before you purchase one policy over another. As experienced insurance professionals, we're here to provide clarity on this decision and help identify which coverage is best for your needs.

What's The Difference Between Term And Whole Life Insurance?

To put it simply, there are two main differences between term and whole life insurance policies: (1) the cost and (2) the end date.

A term life insurance policy will have a lower price point and cover you for a fixed period of time. These policies can last for 10, 20, or even 30 years, and they tend to be easier to understand.

A whole life policy covers you until your death and costs more than a term life policy. This coverage is more complex, but it offers additional benefits that aren't available with term policies.

There is also plenty of overlap between these two types of coverage. Once you purchase either term or whole life insurance in Denver, CO:

  • Your premiums will stay the same throughout your coverage,
  • And the payout (death benefit) will be guaranteed and won't change.

Let's break these differences down a little further.

Term Life Insurance

Commonly referred to as "pure life insurance," term life coverage is designed to protect your dependents in case you die prematurely. Outside of the "death benefit," term life policies have no other value.

The payout and the premium of the policy will stay the same throughout the term. These policies are simple, straightforward, and easy to understand.

Whole Life Insurance

Whole life insurance is a form of permanent life insurance that provides lifelong coverage and includes an investment component. As you pay into the policy, its cash value will slowly grow in a tax-deferred account; which means you won't pay taxes on the gains while they accumulate (Investopedia).

Here's where things can start to get a little confusing with a whole life policy. If needed, you can borrow money against the account or surrender the policy entirely for its cash value. When you surrender the policy, you'll no longer have coverage moving forward. And if you don't repay the policy loans (with interest), you'll reduce your death benefit.

As mentioned earlier, premiums are higher for permanent or whole life. However, the cost is justified because the coverage lasts for a lifetime and the policy has a cash value that will grow throughout your life.

Which Is Best For You? Whole Life or Term Life Insurance In Denver

Everyone's financial situation is different. To figure out which type of life insurance policy you should purchase, you'll need to think critically about the reasons you need coverage in the first place.

Are you worried about finances for a finite length of time? If so, term life is likely the better choice.

Are you more focused on longer-term financial planning goals? Then whole life might be the right option for you.

Of course, you'll want to consult with an insurance agent before you make the final decision. They'll be able to provide expert insights for you on which form of coverage to select.

Term life insurance is likely best for you if:

  • You want to be covered at the most affordable rate
  • You need insurance to replace your income over a certain period of time (e.g., paying off your mortgage, raising kids, etc.)
  • You don't need coverage indefinitely

On the other hand, you should choose whole life coverage if:

  • You wish to leave an inheritance or a trust for your heirs
  • You want to build cash value within your policy
  • You have a lifelong dependent
  • You want to spend your retirement savings and still leave funds for final expenses or an inheritance

Alternative Life Insurance Options

Your coverage options aren't limited to just term or whole life. Other policies can provide lifelong coverage and more investment options, which may better suit your needs and financial situation (PolicyGenius). These permanent life policy options include:

  • Universal life insurance - A more flexible coverage option. Policyholders can adjust premiums and death benefits throughout their coverage.
  • Variable life insurance - A policy that allows you to directly invest the money of your cash value. This approach comes at a higher cost and with inherent risks.
  • Indexed universal life insurance - A type of universal coverage. Under this coverage, policy interest is based on the movement of stock indexes.

Purchase Whole Or Term Life Insurance In Denver Today

Your life deserves to be properly insured. And at Adler Insurance Group, we can help you acquire the perfect coverage for your needs.

Our veteran insurance professionals have decades of experience and specialize in life insurance policies. We will craft a personalized policy for you that meets your needs throughout every stage of your life. We'll discuss the best options for your financial needs and identify the ideal policy for you.

Contact Adler Insurance Group today to get your free personalized quote for whole or term life insurance in Denver.