Term Life insurance the least expensive life insurance and often the best option. The reason it’s less expensive than (whole life as an example) is that there is no cash savings included in this policy. Term life has often been referred to as “pure” insurance for that reason. It provides a death benefit for a specific period of time and nothing more. You choose how long you need the coverage and how long you want to lock your rates in, 1 year to 30 years. The longer the term of coverage, the higher the premium. Once the term is up the coverage ends.

Term insurance is often the first policy young people buy to cover themselves in a simple and economical way. Marriage or the addition of a child to the family are two common events that often trigger the purchase of term life insurance. Term is also used in financial planning to keep insurance costs down, so you can “invest the rest” in higher growth opportunities. Death Benefits are paid income tax free subject to IRS limitations and rules.

Whole Life Insurance provides a death benefit combined with a guaranteed internal investment return. For this reason whole life is more expensive than Term Life insurance. Whole Life is also permanent insurance. As long as you continue to pay the schedule premiums your policy will remain in force no matter how old you are. Whole life is considered a conservative, long term investment because it takes many years for the cash value to build up. Policies that mature, however, earn substantial compounded cash value. While higher risk investments could potentially reap much greater returns faster, whole life is a solid choice for long term planners. For this reason, Whole Life is a commonly used layer of a well balanced financial strategy. Available riders include Cost of Living and Waiver of Premium. Accrued cash value grows tax free, can be borrowed upon at any time and Death Benefits are paid income tax free subject to IRS limitations and rules.