Term vs. Whole Life: Demystifying Life Insurance Options

There are so many different types of life insurance out there that it can be hard to know what exactly you are looking for. When you’re self employed, navigating the best insurance policies to protect not only your business, but yourself and your loved ones, can be complicated. 

Term and whole life insurance are two of the most popular policies for self-employed individuals and business owners, as they both offer a wide range of benefits. But, how do you know which insurance type is best for you and your business? Here, we take a look at the life insurance options available and the differences between term and whole life insurance. 

What Are Term and Whole Life Insurance Policies? 

Term Life Insurance

Term life insurance usually protects you for between 10 to 30 years, depending on how long you want coverage. Should you pass away whilst your insurance policy is still active, then your declared beneficiary will receive the death benefit payout linked with your policy. As the policy lasts for a set period of time, then term life is considered to be a more affordable policy compared to permanent, or whole life, insurance. 

You can also take out a term life insurance policy to supplement whole life insurance during certain life events, such as when you’re buying a house. Should something happen to you during the process, then your beneficiary or family can use the benefit to pay off the mortgage. 

Whole Life Insurance

Whole life insurance involves a policy that offers lifelong cover, for as long as you pay your premiums. No matter when you pass away, your beneficiary will then receive the associated death benefit payout. 

Whole life insurance also has a cash value saving which appreciates over time, that you can then use to pay off premiums or take out a life insurance plan. Though whole life insurance is the more expensive policy, it gives your loved ones more peace of mind as they can rest assured that the policy is in place until it is needed

Is Term Life Insurance Better Than Whole Life Insurance?

The answer is dependent on your requirements. If you only need life insurance for a short period of time, then a term life insurance policy could be better, and the premiums will be more affordable. But, if you need permanent coverage which will last you for the entirety of your life, then whole life insurance should be the preferred insurance choice. Whole life insurance policies also have a range of different benefits which come from the value accumulation feature. 

Business Owner Protections

As a business owner, it’s important to make sure that you and your business have the right level of protection in case of the unexpected. Whilst term and whole life insurance policies are good to have, there are a range of other different insurance policies which can further support these and you and your business. 

Key man insurance protects your business and its key employees from the unexpected, whereas executive income protection protects smaller businesses against unexpected sick pay. If you’re not sure what business insurance you need, then it’s always good to speak to a broker who can look into them for you.