What is the difference between whole life insurance and term life insurance?
The two basic types of life insurance are whole life insurance and term life insurance. These two types of life insurace
differ in many ways, including length of life insurance coverage, insurance premiums, and accumulated
life insurance cash value.
Whole Life
Term Life
The Basics
Whole Life
Guaranteed lifetime protection.
You have access to a growing cash value.
Term
Coverage without cash value.
Length of coverage
Whole Life
Lifetime coverage as long as your premiums are paid.
At a certain point cash value can cover premiums.
Term
Usually a set time.
Many popular plans offer coverage from ages 50 to 85.
How you pay
Whole Life
Pemiums typically don't increase.
Ther may be options to pay monthly, querterly, or yearly.
At a future date interest earned may cover premiums.
Term
Pemiums at less expensive than whole-life insurance.
Coverage only continues as long as you pay premiums.
Cash value and growth
Whole Life
Cash value will grow, typically with interest, and can be accessed.
Interest is tax deferred.
Term
No cash value.
Life insurance benefits
Whole Life
Death benefits can be transferred to beneficiaries tax free.
Term
Death benefits can be transferred to beneficiaries tax free.