Term vs. Whole Life Insurance
As a new employee of Empower Brokerage, I understand the overwhelming feeling that comes along with learning about the insurance business. There seems to be a million terms and concepts that accompany it. And just when you think you’ve got those down, a million more pop up! That is why I wanted to take some of the most important insurance concepts and break them down in an easy-to-understand way, starting with term vs. whole life insurance.
Term Life Insurance
Term life insurance is just as it sounds- an insurance plan that provides coverage for a limited amount of time, usually 10-30 years. And only if you pass away during that time will your beneficiaries receive the death benefit payout. It is a great option for most because it is one of the most affordable plans in life insurance. However, since the coverage does expire, if needed, your client would have to seek out a new policy which would become more expensive.
Whole Life Insurance
Whole life insurance is an insurance plan that is designed to stay in effect throughout one’s lifetime. So, you do not ever have to worry about being uninsured. Besides the length of coverage, the main difference between term and whole life insurance is that whole life has a cash value alongside the insurance policy. Every month a portion of the premium paid is put to the side, into what is like savings, to be used as loans, retirement, or premium payments. The security of a whole life policy does come with a steep price tag, though. A client can expect to pay six to 10 times more than a term life policy.
Pros and Cons of Each
Term Life Pros:
- Simple and straightforward
- Ability to cancel the policy before expiration
Term Life Cons:
- Expiration date requiring search for a new policy
Whole Life Pros:
- Lasts as long as you do
- Growing cash value
- Tax-free loans
- Earn interest on full account *ask agent for details
Whole Life Cons:
- 6-10x more costly than term life
- Most abandon policy due to high costs
- Other investment opportunities with higher interest rates
Both types of insurance have their own benefits and downsides, but it is your job as an agent to determine what plan would best fit your client’s needs. I hope this can help you provide a basic overview to your clients of what these two insurance plans have to offer!
We hope this information on term vs. whole life insurance is helpful to you.
Empower Brokerage is dedicated to helping you educate your clients on the insurance they need and staying on top of their health. Whether it’s through webinar training, one-on-one calls, seminars, or marketing plans. We want you to be successful. Give us a call if you have any questions at 888-539-1633.
Kayla is a graduate of Texas A&M University and joined the marketing team at Empower Brokerage in early 2021. She creates content for the company websites and assists with various marketing campaigns. LinkedIn Profile