How do term life and whole life coverage differ?
The two main types of life coverage are term life and whole life. They differ in how long coverage lasts, how premiums are structured, and whether a savings option is offered:
- Duration: Term life policies typically provide coverage for a predetermined amount of time (e.g. 10, 20, 30 years), and benefits are normally only paid if the policyholder passes away during this time. Whole life policies are usually intended to provide coverage throughout a policyholder’s life, eventually paying death benefits upon passing.
- Premiums: Most term life policies have fixed premiums that don’t change throughout the policy’s term. Whole life policies’ premiums often escalate as the policy continues providing coverage. Premiums can become quite expensive later in life, but the interest that accumulates in these policies frequently is greater than the premiums later in life. In many cases, the accumulating interest can eventually be used to pay the premiums.
- Savings: Most whole life policies include a savings option, possibly in the form of an annuity. Part of the premiums paid can contribute to the savings, which along with interest can build up a nest egg for later in life. Term policies rarely (if ever) have such a feature.
What are cash-value whole life policies?
The savings that accumulate within a whole life policy build up what’s commonly referred to as “cash value.” The cash value is what’s able to help with expenses later in life, or sometimes during financial emergencies as you may be able to borrow against this amount.
How can Massachusetts residents get quotes for life insurance policies?
For assistance with life insurance, contact the independent insurance agents at Norwood Insurance Agency. Our agents can help you explore quotes from multiple insurance companies that underwrite policies in Massachusetts, and we have the expertise required to help you determine which quote best meets your needs.