Which is better term life insurance or whole life insurance

What Is Term Life Insurance?

Term insurance covers a fixed span of time – or term – and is generally considered temporary insurance. The term can last as little as one year, and you can scale it from there depending on the provider. The average span of a term life insurance policy is between 10 and 20 years, but the term can also cover someone until they reach a specified age.

These policies generally pay the death benefit if you pass during the term of the policy. But if the policy expires before you pass, the insurer will not pay the death benefit. In other words, when you buy term life insurance, you are only covered for the period of time that you pay the premiums.

If the term of the policy ends before you pass, then the policy typically expires and the insurer won’t pay a death benefit. Fortunately, some term insurance policies are more flexible:

• Renewable term – A renewable policy typically allows you to renew for a set period of time when the policy expires.
• Convertible term – A convertible policy typically allows you to convert the insurance to a different plan.

To qualify for term life insurance, you may have to take a medical exam, sometimes called a life insurance exam. Medical exams are often required because the coverage amounts are high. Because term life insurance is straightforward and doesn’t accumulate cash value, the premiums are relatively low (depending on your age and overall health) compared to whole life insurance.

The reason you can find lower premiums for term life insurance policies is that the coverage is only good for a specific period of time. But term life insurance premiums depend on several factors. For instance, they will vary depending on whether you are a smoker or non-smoker, your age, and any pre-existing health conditions you may have.

Term Life Pros & Cons

If you plan to purchase term life insurance, you should know that it has pros and cons. Here are some to consider before purchasing this type of life insurance:

What Is Whole Life Insurance?

Sometimes called permanent insurance, a whole life insurance policy provides coverage for your entire life as long as you pay the premiums. This type of insurance can accumulate cash value, which builds up in the policy as you pay your premiums. Depending on the provider, you can withdraw a policy’s cash value in the form of a policy loan or apply it toward the policy’s premium. Any unpaid policy loans will be subtracted from the death benefit.

Whole life policies pay death benefits to the primary beneficiary when you die. Unlike term plans, whole life policies provide coverage for your entire life. As long as the premiums are paid, the policy stays in force until you pass.

Another advantage of whole life insurance is that the policy premium is locked in for the life of the policy. This feature is important because typically life insurance costs more as you age and can be harder to qualify for. Locking in an affordable premium early can make a difference in affording life insurance as you get older.

Depending on the provider, most whole life policies don’t require a medical exam to qualify, you just answer a few health questions.  This may make it easier to qualify if you have health issues.

Whole Life Pros & Cons

Just as with term life insurance, whole life insurance has its pros and cons. Here are some to consider:

Term vs Whole Life Insurance Cost Comparisons

Here are some examples of term life and whole life insurance premiums*.

*Rates do not reflect any particular insurer.

*Rates do not reflect any particular insurer.

Term vs Whole Life Insurance Pros & Cons: Which Policy is Better?

To determine whether term life or whole life insurance is better for you, consider the following pros and cons of each.

Which is better to have whole life or term life insurance?

Do most experts recommend whole life or term life insurance?

What happens at the end of term life insurance?

What is the disadvantage of whole life insurance?