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Choose what's best for you between term life insurance and whole life insurance

“Decide which kind of life insurance fits your needs the most in the current situation you are in. If you believe that someone in your life or yourself is in a dire situation such as a life threatening disease, etc., then term life insurance is the best choice for you. If you just need it for long-term protection and benefits, then whole life insurance is an excellent decision for you.

 

TBA

  • TBA

  • Whole life insurance is five to 15 times more expensive than term life.

  • Whole life has a cash value component that acts similarly to a savings account, but the return is relatively low.

Term vs. whole life: How can we figure it out between the two?

The way we can make these two life insurance policies distinctive is that term life insurance gives the benefits and coverage from 10-30 years while whole life insurance provides protection throughout your whole life since it’s unlimited. Whole life insurance is definitely more complex than term life insurance due to the fact that there’s no cash value in it.

How does one define whole life insurance?

It is a life insurance that only covers throughout your whole life until you don’t have enough to pay the high premiums. This also provides you death benefits along with cash value growth.

Let's look at the coverage differences between two of the life insurances

These are the key differences and the basic rundown on the policy features of both term life and whole life insurances

 

Step 1 of 5

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Policy features

Term life insurance

Whole life insurance

Duration

10 to 30 years

Life

Cost

$25 to $30/month

$25 to $30/month

Guaranteed death benefit

Yes

Yes

Guaranteed cash value

No

Yes

How cash value grows

N/A

Earns interest at a fixed rate

Premiums

Level

Level

Risks

No cash value savings option

Low interest rates and high premiums

Methodology: TBA in March 2022 from our 10 partner life insurance companies: AIG, Banner, Brighthouse, Lincoln, Mutual of Omaha, Pacific Life, Protective, Prudential, SBLI, and Transamerica. Rates are calculated based on a $500,000, 20-year term life insurance policy and $500,000 whole life insurance policy paid up at age 99 for 35-year-old female and male non-smokers in a Preferred health classification.

How can we differentiate between the price of whole life and term life insurance?

“As presented in the chart, you will see that whole life is definitely much more expensive than term life since the benefits you get for whole life stays forever

Policy features

Term life

Whole life

25

$17.22

$199.00

35

$18.95

$288.00

45

35.72

$435.00

55

85.40

692.00

Note that a whole life policy costs as much as 15 times more than term life in the example above for the same death benefit. Visualized another way, the difference in cost is even clearer:

Frequently asked questions

The way we can make these two life insurance policies distinctive is that term life insurance gives the benefits and coverage from 10-30 years while whole life insurance provides protection throughout your whole life since it’s unlimited. Whole life insurance is definitely more complex than term life insurance due to the fact that there’s no cash value in it.

“Decide which kind of life insurance fits your needs the most in the current situation you are in. If you believe that someone in your life or yourself is in a dire situation such as a life threatening disease, etc., then term life insurance is the best choice for you. If you just need it for long-term protection and benefits, then whole life insurance is an excellent decision for you

There are many advantages and disadvantages for term life insurance but the main advantage to point out is that your beneficiaries such as your family and children will get a much higher benefit when you pass away. The main disadvantage is that you must renew/buy the term life insurance again once it expires.

“A big benefit you can get from whole life insurance is that you’ll always get a death benefit for your family and children but one of the main losses would be how highly priced the life insurance is.