Should I Buy Term Life Insurance or Whole Life?

When searching for life insurance policies, you may notice two types that commonly pop up, term life and whole life insurance. While they might not seem so different on the surface, the more you find out about them, the more different they become, each with its own set of unique features.

Knowing these key differences can help you determine which policy is best for you and which one you can benefit the most from. Below we’ll introduce you to both, along with a look at the key differences to help you decide.


Term Life Insurance

Let’s start with term life insurance, as it’s more basic than whole life insurance. Instead of lasting the entire duration of one’s life, term life insurance is only valid for a pre-determined term, which could range anywhere from 5 to 30 years.

Once the term ends, the policy expires, though the benefits are paid out in the event of the death of the policyholder. These benefits are paid out to beneficiaries according to the contract made between the policyholder and the insurance company.


Why Term Life Could Be your Choice

Because this type of insurance only lasts for a particular amount of time, term life insurance tends to be cheaper than whole life insurance. That means that you can get coverage without having to pay an arm and a leg for it. Additionally, it provides a substantial security net that can help to secure assets and loved ones in the event of a death.


Why you Might Consider Whole Life Instead

The one key drawback with term life insurance is that it comes with the need for a medical examination. On top of that, the price of the premium depends on a number of factors, some of them including the amount of time and coverage a policyholder receives.

Depending on your situation, a term life insurance policy could cost more and not last as long as you need it, requiring a different type of insurance.


Pros and Cons of Term Life Insurance



  • Low-cost option for those looking for life insurance coverage
  • Simple structure



  • Lasts for a limited amount of time (the term)
  • Comes with no tax benefits


Whole Life Insurance

Unlike term life insurance, whole life insurance comes with coverage for life. It never expires and provides an additional option that term life does not the cash value. Over time, policyholders pay premiums to keep coverage, which gets held in an account that adds up over time to an amount that policyholders can access via withdrawals or loans.


Why Whole Life Could Be your Choice

When you choose a whole life insurance plan, your premium never increases. On top of that, the premium is a little higher, though part of it is used for the premium and the other goes toward the growth of the cash value.

Over time, this cash value grows, becoming an investment that policyholders can access in a number of ways. Whole life insurance policy loans typically come without high-interest rates or taxes, as long as they do not exceed the initial policy amount.


Why you Might Consider Term Life Instead

If you’re looking for a budget-friendly plan, this is not it. The premiums tend to be high and whole life insurance will cost you. While your cash value seems like a great option to have, taking out a loan or withdrawing cash will reduce the death benefit.

This means that, if you borrow against your policy, you’re taking money away from beneficiaries, reducing the overall payout they receive upon your death.


Pros and Cons of Term Life Insurance



  • Comes with a cash value that you can withdraw from
  • Loans and death benefits are tax-free
  • Premiums stay the same



  • Whole life insurance is costly
  • Failure to keep up with payments results in a surrender (lots of fees and penalties)


Things to Consider Before Choosing

While both life insurance plans have their own set of benefits and drawbacks, choosing the one for you requires some consideration. A few things you should keep in mind include:


Your Budget

Most importantly, it’s recommended to consider your budget. If you’re on a budget, then term life insurance may be the answer. It’s more cost-effective and will provide coverage for a set term so you can decide if you want to keep it or not.

On the other hand, if you can afford it, your whole life could be a way to invest while securing a life insurance policy.


Your Health

If you have a serious or life-threatening condition, you might not qualify for term life insurance. If you do qualify, you might wind up paying much more, even if you’re not getting the coverage you need out of your policy. Whole life insurance does not require extensive health checks like term life insurance, and therefore does not go up when there is a chronic illness or unhealthy habits involved.


Your Needs

Some of those shopping for life insurance has a family, which motivates them to want to secure their family’s future. If that’s the case, a policy that lasts for the duration of one’s life and collects accessible cash over time could be the best option. Whole life insurance will be paid out to loved ones and can result in a substantial amount of help when financial stress happens.


Before you Go

Searching through all of your options can be difficult and finding the right fit to secure your assets and loved ones can prove to be challenging. Instead of going at it alone, give Sim a call. She can sort out how each type of life insurance policy would work based on your business as well as personal needs, helping you choose the best one with the best return.

Whether you’re looking to secure assets and invest or just secure a life insurance policy to protect your loved ones, Sim can help. Schedule a call, explore your options, and be prepared for when the unexpected happens.




FAQs & Helpful Resources Regarding Whole Life Insurance


Other Types of Life Insurance Products You May Want To Check Out



When To Get Covered

When it comes to life insurance there really is no time that is too soon to get covered. And, this is because the younger you are, the cheaper those premiums are going to be. Not only this, but you are probably healthy right now.

If you wait until something bad happens, you will not only without a doubt face higher premiums, but you might not even be able to get covered at all.






get quotes