Depending on your needs for life insurance, a concept called a “laying insurance policy” may be the perfect solution. Term and whole insurance policies aren’t mutually exclusive. “Also, over the first few years, the policy doesn’t generate much cash value, so it’s not a good short-term option.” Other types of life insurance “That means that if you decide to terminate the policy, you won’t lose all of your money.” And since the policy is locked in for life, you’ll also never have to worry about re-qualifying as you age or if new medical conditions arise.Ĭons: Whole life insurance is more expensive. The pros: “In some cases, you may be able to pay off your lifetime premiums early, but coverage stays in force for the rest of your life,” says Mitchell.Īnother pro: A whole life insurance policy generates a cash value. When you pass away, your beneficiaries will receive a payment, provided the premiums have been paid. Whole life insurance is a policy designed to cover you for your lifetime, as it does not expire. Each time your term renews, you’ll be older, and that factor will increase your premium.” The pros and cons of whole life insurance “These policies don’t age well because of the renewal process. So, if you don’t use the insurance, you don’t get any premiums back.” Plus, choosing to insure yourself term by term can be more expensive in the long run. The cons: “ A term life insurance policy has no cash value. “It’s also a great option for short-term coverage, or debt with a timeline. The pros: “ Term life insurance is less expensive than whole life insurance,” says Adam Mitchell, president of Mitchell & Whale Insurance Brokers Ltd., in Whitby, Ont. If you pass away during the term, a payment will go to your beneficiaries. Your premium costs stay the same throughout that period and may change when the term is over, if you choose to renew it. True to its name, term life insurance provides coverage for a set period of time-usually a 10-, 20- or 30-year term. Just close the tab to return to MoneySense.
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