Term vs. whole: Free life insurance quotes in minutes

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Key takeaways

  • Term life insurance is the right choice for most shoppers.

  • 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.

"Infinite banking" life insurance is the latest TikTok trend — but is it a scam?

The truth about infinite banking with a whole life insurance policy is more complicated — and costly — than what you may have heard on social media.

What is whole life insurance?

Whole life insurance is a type of permanent life insurance that stays active for your entire life. Whole life is more complex than term life because of its cash value.

The policy’s cash value grows over time at a rate controlled by your insurer. You can use the cash value to take out loans or use it for retirement when the account matures. Some restrictions apply to when you can begin making withdrawals and interest on policy loans.

Term life vs. whole life: Coverage comparison

Below is a quick overview of common term and whole life policy differences, including a cost comparison for 35-year-olds.

 

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: Estimated term and whole life insurance quotes based on policies offered by Polynguyen 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.

Cost comparisons for whole vs. term life insurance

Both term life and whole life premiums stay the same for the duration of your policy. Because coverage lasts longer and comes with a cash value, whole life insurance is five to 15 times more expensive than a comparable term life policy.

The charts below compare the monthly cost of a $250,000, 20-year term policy and a $250,000 whole life policy for a male non-smoker at different ages.

 

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

Term life offers affordable coverage for a set period, usually 10 to 30 years. Whole life is a lot costlier because it lasts your entire life and has an investment-like component.

Term life insurance is better for more people because it’s affordable and easy to manage. Whole life insurance is more expensive, but better for people who have a high net worth or long-term dependents.

Term life insurance is cheaper and simpler to manage, but if you need insurance after your coverage expires, a policy may be costly.

Whole life provides permanent coverage, but the policy isn’t cost-effective for most people and the cash value earns low interest.