Term Life Insurance vs. Whole Life Insurance

We get many emails asking "which is better term or whole life insurance". Comparing the different types of available insurance can be an overwhelming task. As such, that's often best left to the agents and professionals. However, you can make some basic decisions for yourself about the type of policy you need. Following are some comparisons between a basic Term Life Insurance policy and a basic Whole Life Insurance policy to help you make some decisions that meet your life insurance needs.

Premium Payments
One of the main differences between Term Life policies and Whole Life policies is the premium payments. With Term Life policies, the premiums are generally lower because there is a fairly good chance that the insured will outlive the policy and never cash it in. With Whole Life policies, however, the premiums are typically higher because these policies offer permanent protection as long as the premium payments are made.

Flexibility
Term Life policies are less flexible than Whole Life policies. With Whole Life policies, for instance, the insured is often allowed to withdraw money from the cash value they have built up with their premium payments over the years. The insured can also choose different payout options for beneficiaries, such as death benefit plus the cash value or just the death benefit, depending on your particular policy. Term Life policies, on the other hand, do not offer this option. You simply make premium payments and your beneficiaries get the cash value of the policy if you die within the time of the policy.

Death Benefits
The death benefits between Whole Life and Term Life policies are another consideration when making your decision. Death benefits for Term Life policies are only paid out if you die within the term of the policy. For instance, if you choose a 20-year Term Life policy and you die while you're making payments, your beneficiaries receive the face value of the policy. After 20 years, though, you either surrender your policy or renew it through your current agency at a higher premium. With Whole Life policies, however, you are covered for the entire life of the policy, assuming you keep making premium payments and you have not withdrawn money from the available cash value.

Whichever way you look at it, there is no clear advantage of one type of insurance over the other. Term Life Insurance and Whole Life Insurance both have their advantages and disadvantages. That's why it's critical to discuss your options with a professional agent before making your final decision.