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Whole Life
Whole life insurance provides lifelong coverage and can serve as an investment vehicle. Here are some reasons why one may choose whole life insurance:
Permanent coverage: Whole life insurance provides lifelong coverage, as long as the premiums are paid. This means that your beneficiaries will receive a death benefit regardless of when you pass away.
Cash value: Unlike term life insurance, whole life insurance policies build cash value. A portion of the premiums are invested, and the cash value grows over time. This can be used as an investment vehicle, and the policyholder can borrow against this cash value or surrender their policy for cash.
Tax benefits: Whole life insurance policies offer some tax benefits. The cash value grows tax-deferred, meaning you don't pay taxes on the growth until you withdraw it. Additionally, the death benefit is typically tax-free.
Legacy planning: Whole life insurance can be used as part of a legacy planning strategy. The death benefit can be used to provide a tax-free inheritance to your beneficiaries, and the cash value can be used to pay estate taxes or leave a charitable donation.
Permanent coverage: Whole life insurance provides lifelong coverage, as long as the premiums are paid. This means that your beneficiaries will receive a death benefit regardless of when you pass away.
Cash value: Unlike term life insurance, whole life insurance policies build cash value. A portion of the premiums are invested, and the cash value grows over time. This can be used as an investment vehicle, and the policyholder can borrow against this cash value or surrender their policy for cash.
Tax benefits: Whole life insurance policies offer some tax benefits. The cash value grows tax-deferred, meaning you don't pay taxes on the growth until you withdraw it. Additionally, the death benefit is typically tax-free.
Legacy planning: Whole life insurance can be used as part of a legacy planning strategy. The death benefit can be used to provide a tax-free inheritance to your beneficiaries, and the cash value can be used to pay estate taxes or leave a charitable donation.
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Term Life
Term life insurance is a type of life insurance policy that provides coverage for a specific period of time, usually ranging from 10 to 30 years. It offers a death benefit to the beneficiary named in the policy if the policyholder dies during the term of the policy. The policyholder pays a premium on a regular basis, either monthly or annually, to keep the policy in force.
Term life insurance is a popular choice for many because this type of insurance is often cheaper compared to whole life insurance because it doesn't have a cash value component.
Term life insurance is suitable for those who have dependents and want to ensure their financial security in case of sudden death or illness. It's also ideal for those who have large debts, such as a mortgage, and want to ensure that their loved ones can pay off the debts.