What life insurance is right for me?

Life insurance benefits your loved ones when the inevitable happens. While it can be hard to contemplate your own demise, choosing the right whole life or term life insurance policy can protect your home and allow you to leave a legacy for your loved ones.

term life insurance provides a guaranteed death benefit only if the insured person dies during the term or term of the policy. Usually that’s between one and 30 years old or up to a specific age. Term life insurance tends to be much cheaper than whole life coverage because term policies don’t have a cash value component and can expire without paying any benefits.

whole life insurance it is a form of permanent life insurance that covers a person for their lifetime, rather than for a fixed period of time. Whole Life pays a guaranteed death benefit and has a cash value component that the policyholder can borrow or withdraw under certain conditions.

As its name implies, whole life insurance lasts for a lifetime. As long as you continue to pay the premium, this type of lifetime coverage will pay a guaranteed death benefit when you die. Some key features of whole life insurance are:

  • Premiums are guaranteed. When you buy this type of life insurance, the premium is locked in. It will not increase during the life of the policy holder. In general, the higher the death benefit, the higher your premium will be.
  • Cash savings grow over time. You may be able to borrow against the principal or withdraw some of the money. However, if you die before the loan is paid in full, the death benefit will be reduced by the amount still owed. You may also be able to redeem the policy and receive the cash value.
  • A medical exam is often required. Depending on the type of policy, you may be required to undergo a physical exam before your application is approved to determine your premiums and insurance risk. Some companies offer no-exam whole life insurance policies that have a guaranteed payout and can build cash value, but these policies tend to have coverage levels that are much lower, typically $25,000 or less.

Term life insurance lasts for a specific term or period of time and pays the beneficiary a guaranteed death benefit only if the policyholder dies during the term. However, some term life policies offer a return-of-premium feature, which returns some or all of the premiums if the policyholder doesn’t die before the term expires. Return-of-premium term life policies are generally more expensive.

Other features of term life insurance include:

  • Premiums may change. The most common type of policy, known as a level term, has fixed premium rates, but there are other types of policies where premiums rise or fall over time with corresponding changes in the amount of the death benefit.
  • Some policies can be converted to whole life. Some insurers allow conversion at any time during the life of the policy, while others impose time or age limits. You can also convert the policy at the end of the term. If you want the option to convert your coverage, look for a policy that contains a conversion provision or offers the option of adding an additional conversion term.
  • Terms are flexible. Most insurers offer policy terms that range from one year to 30 years or more, although some companies also offer terms that last up to a certain age, such as age 65. In general, the shorter the term and the younger you are, the lower your premium will be. be.
  • A medical exam may not be required.. While many insurers still require an exam to get a basic term life insurance policy, several insurers now offer no-exam term life insurance.

In general, a term life policy is much cheaper than a whole life policy. For example, a hypothetical 40-year-old non-smoker could pay as little as $52 a month for a $1 million 20-year term life insurance policy. If that same woman wanted a whole life insurance policy, she would pay $1,000 or more per month, according to our data.

Term coverage is cheaper because it pays only if the insured person dies during the term of the policy. Whole life insurance costs more because it pays a survivor benefit regardless of when a person dies and also builds cash value over time.

Life insurance takes many forms. Depending on your financial needs and goals, it may be worth considering one of these types of permanent life insurance:

  • Universal. A universal life insurance policy has a little more flexibility than whole life. For example, you may be able to increase your death benefit or change your premium payments. Typically, the policy makes money based on the market index or the insurer’s investment portfolio. However, the value could potentially decrease if the rate decreases.
  • Indexed. This insurance coverage has a cash value as well as a death benefit. The cash value account earns interest based on a stock market index chosen by your insurer. There is no set fee, but insurers usually pay a minimum fee. You can usually borrow or withdraw from this policy and adjust your premium payment and payment.
  • Variable. In addition to a death benefit, variable life insurance has a savings account that can be invested in stocks, bonds, or money market mutual funds. Of course, this comes with a risk: If your investments don’t perform well, both your cash value and death benefit could fall. Some policies guarantee that your payment will not fall below a set minimum.
  • final expenses. Also known as burial insurance, this is a type of whole life policy with a fairly low payout, typically $5,000 to $25,000, that is purchased specifically to pay for end-of-life expenses such as a funeral and burial or cremation. The payment is small, but so are the premiums: they can be as little as a few dollars a week.

When shopping for insurance, you’ll likely see several types of policies, including variations of those listed above, including variable universal life and indexed whole life. For more information, visit our Life Insurance Quotes guide.

Do I need term life and whole life policies?

There’s nothing stopping you from buying both types of life insurance policies to cover yourself or your loved ones. It all comes down to your needs and budget. For example, you might buy a term life policy in your 20s, when your lifestyle is fairly modest: a spouse or partner but no children, renting instead of paying a mortgage, and few savings or other assets. In this scenario, replacing lost income resulting from your death should be the priority, something a term life insurance policy can do for a relatively low monthly expense.

As you age and acquire savings and other financial assets, you may want to add a whole life insurance policy to supplement a term policy or to replace it when it expires. Because whole life insurance builds cash value, it can provide an additional layer of financial support. You can use the funds for an emergency while you live, or your beneficiaries can use the death benefit to meet financial obligations like college tuition or to support a disabled child or spouse.

The best way to determine what type of life insurance policy or policies to purchase is to speak with an independent agent or financial planner, who can help you assess your needs.

Can term insurance be converted to whole life insurance?

If you have what’s known as a convertible term life insurance policy, you should be able to convert it to a whole life policy. Some companies impose a deadline or age limit to do so, while others will allow you to convert your policy at any time during the term. Depending on the insurer, a medical exam may not be required. But keep in mind that your new premium will likely be much higher, since whole life insurance is more expensive than term coverage.

Not all insurers offer convertible term life insurance. Check your policy or contact your agent for more details.

Can whole life insurance be converted to term life insurance?

A provision called an extended term insurance option allows you to surrender your policy and use the available cash value to purchase an equal amount of term life insurance. It may be worth considering this option if you can no longer afford your life insurance premiums. It’s important to remember that the new term life policy may not last the rest of your life.

Does whole life insurance cover long-term care?

Depending on the company, it may be possible to purchase a whole life insurance policy with an optional add-on called a long-term care rider. This additional coverage can be used for expenses not covered by health insurance, i.e. assistance with daily tasks such as bathing, eating or dressing, while under the care of a nursing home, long-term care facility term or a home. health aide

The best life insurance companies of 2022

Learn more

For more information on life insurance, check out the following guides:

Related 360 Reviews

For more information on other types of insurance, see the following guides:

Why You Can Trust Us: 25 Researched Life Insurance Companies

At US News & World Report, we rank the best hospitals, the best colleges, and the best cars to guide readers through some of life’s toughest decisions. Our 360 Reviews team uses this same unbiased approach to rate the products you use every day. To build our ratings, we researched more than 25 life insurance companies and agencies and analyzed 14 third-party review sources. Our 360 Reviews team does not accept samples, gifts, or loans of products or services that we review. All sample products provided for review are donated after review. In addition, we maintain a separate commercial team that has no influence on our methodology or recommendations.

US News 360 Reviews takes an unbiased approach to our recommendations. When you use our links to purchase products, we may earn a commission, but that does not affect our editorial independence in any way.

Leave a Comment