Whole life insurance premiums are more expensive than term life insurance because they are permanent insurance coverage, where as term is temporary.
Depending on your financial obligations, whole life coverage may be the better policy option, according to a recent report by the Boston Globe. The policies not only last longer, but they also offer investment opportunities allowing them to build cash savings over time.
“The earnings on that cash value are used to pay part of the rising cost of insuring your life as you age, since your risk of dying increases with age,” the report says.
These savings may also be used to pay an estate tax incurred on larger assets, like family-owned businesses. However, most consumers do not have estates large enough to be taxed. According to the report, making term-life insurance the more affordable option.
Life insurance policies purchased to cover a specified number of years may be enough for individuals who don’t have long-term commitments. Coverage can protect a family’s financial well-being until their obligations are paid off and may offer renewal opportunities.