Life insurance is often overlooked by most individuals because of its complexity, cost, and what it represents. While no one wants to think about the end of their life, doing so early on can protect one’s loved ones from future financial hardship. Often marked by complicated structures, life insurance quotes are a useful tool in understanding available options and making solid decisions.

Whole versus Term Life Insurance

The most basic distinction between types of life insurance is the line that is drawn between whole and term policies. Each has its own unique features and advantages over the other. Making a choice between these two options is the first step in setting up one’s insurance policy.

A whole life policy is preferable in several ways, but will generally cost most than a term policy. With a whole life insurance policy, an individual builds value in the policy by making regular contributions which are then invested. Each month, the policy premium is deducted from the account and paid to the insurance company. If the investments perform well, at some point an individual will be able to stop making payments and can pay for the policy from returns. In this sense, the policy is much like an investment account. If at any time before the account is fully paid for, the insured dies, the policy pays the full policy amount. Throughout the life of the policy, if the investments have done well, the policy may have a cash surrender value; it can be cashed in and cancelled. Under some policies, the insured may borrow against the account, getting both the cash benefit and the insurance protection.

Under a term policy, the premiums are less, but there is no cash value to the account. Furthermore, the policy is called a term policy because it may expire when the insured reaches a certain age. While this age is often quite high, sometimes 80 or higher, it does have a limit. This type of policy provides a death benefit only, and has no other value. For many, because it is far more affordable, this is the best option because it allows for a high level of coverage without high costs.