While life insurance has become a less discussed investment vehicle in recent years due to its relatively slow growth rate, it is still vital to the risk management strategy of many households. As such, it’s often the first investment tool people gain outside of workplace retirement accounts. The combination of those two factors can produce a marketplace where the average customer doesn’t know where to begin making choices about coverage. If you’re shopping for life insurance Elk Grove CA for the first time and you don’t know whether term or whole life insurance is better for you, you are not alone. Let’s review who each one is designed to service, and then you can make a more informed choice.
Whole Life Policies
These policies eventually mature, as they are essentially lifelong savings accounts where your premium can either slowly decrease or remain the same while building value more rapidly over time. After they mature, they can even be renegotiated or eventually rolled over into other investment vehicles. In some cases, those with mature whole life policies can even use them as a source of financing. They have higher premiums when compared to term life policies, though.
Term Life Policies
The premium is lower for what is generally a higher benefit if the insurance pays out, and that is what people usually notice first. The premiums can change after the original term of the insurance expires, though, so these policies have a limited window where you know for sure they are going to give you the expected value. They also don’t accrue equity, so the investment uses that whole life can be put to after maturation are not open to these policyholders.
If you still don’t know which would be right or you want the benefits of both types of insurance, a provider should be able to sell you a combined policy that splits the premiums and benefits. It’s just a matter of finding the insurance company that can offer you the deal that feels like a good fit.