When it comes to choosing a life insurance policy, it can generally boil down to two choices – term life and whole life. Term life, as the name implies, is only valid for a period of years – typically 15 or 20. What this means is that if you purchase a $1 Million 20-year term life policy than if after those 20 years you are still living the policy is no longer active. Conversely, whole life offers the benefit of being active for the remainder of your life or as long as the policy premium is paid. Additionally, whole life insurance also has an investment component that allows you to earn a little bit of interest every year of the policy. Any gains you accumulate are tax-deferred and you’ll have the opportunity to take a loan from the accumulated funds. Some whole life insurance policies pay an annual dividend so be sure to ask your insurance agency if that is an option you want to have.
When it comes to choosing between the two, term life is going to be less expensive because it is only valid for a certain period of time and does not have a cash value that allows for borrowing. Whole life insurance will be costlier but the coverage lasts for your entire lifetime and has a guaranteed rate of return on a portion of the policy premium that you pay annually.
At Front Range Insurance Services in Littleton, CO, we understand that choosing a life insurance policy can be a difficult and emotional decision. That’s why our friendly and professional staff is always ready to answer your questions and walk you through the decision making process. We encourage you to give us a call so we can walk you through all your life insurance options and help you choose the policy that best protects your loved ones.