Is it Good to Convert Term Life Policy to a Whole Life Policy?
- A term life insurance policy is for a set period of time, up to 30 years. When you purchase term life insurance, you are only purchasing a benefit that will be given to your beneficiaries should you die during the established time period.
- Whole life policies include an investment component. In addition to the benefit paid out upon your death, there is also an additional savings or investment account that you can borrow against or withdraw from while you are still alive.
- You can either pay level premiums or renewable premiums for term life insurance. A level premium means you pay the the same rate for the duration of the policy, while the rate of a renewable premium fluctuates.
- Whole life insurance premiums are generally much higher than term life premiums, since a portion of the premium is placed into an investment account. However, it usually makes more financial sense to pay the lower term life premium, and invest the money you save elsewhere.
- You can renew a term life policy up until a certain age (usually 75). By the time you reach the age where a term life policy cannot be renewed, the beneficiaries you bought the plan for should be old enough to provide for themselves.