Difference between term and whole life insurance?

Answer 1

Term life insurance provides protection for a specified period of time (e.g., 5, 10, 15, 20, or 30 years) at an affordable cost but premiums increase drastically with age.

Whole life insurance provides protection for your entire lifetime and accumulates a cash value that the policy owner can borrow against.

Term: Want to protect your family from financial hardship in the event of your death. You are underinsured and want to supplement your coverage

Whole Life: Have a long-term need for life insurance. Want to accumulate cash value to borrow against to provide funds for education, retirement or other future goals

Term: More affordable than whole life insurance.

Whole Life: Premiums do not increase with age. Builds cash value.

Term: Does not build cash value. Coverage ends when policy expires. Premiums may increase with age and look negative in later years compared to a whole life policy where cover increases as cash value grows.

Whole Life: Initially higher premiums than term coverage, however later or in older age it pays off.

A well designed whole life plan would ideally serve insurance needs of a person, if they can afford it. Start when no or low loan emi's are there, saving is a habit like spending, after all the money returns to you.

The biggest grouse by pro equity market + term insurance is the earning of the agent. However when buying something you should see what you get not the advisor as everyone in this world has to be paid for work done, just as when buying a car, or a house.

Answer 2

Whole life insurance provides lifetime protection and builds cash value within the policy. As long as you pay your premiums on time, your life insurance remains in effect. Term life insurance provides temporary protection for a specific number of years, usually 1-30 years. If you outlive your policy, the life insurance coverage expires. Term life insurance is less expensive than whole life insurance in most cases. Whole Life (WL) is considered "permanent" insurance; that is, it is intended to be kept for one's entire life. WL also builds "cash value", which may be borrowed or used to pay premiums . Term (T) is a non-cash value type of coverage, which runs for a term of time e.g. 10, 20 or 30 years. At the end of the policy term, the contract terminates, and coverage ends.

Whole life insurance will cover you for your whole life, or up to the age of 100. Term life will cover you only for a specified term - 10, 15, 20 or 30 years.

Whole life insurance is more expensive than term life insurance. This is because whole life insurance also acts as an investment and will accrue cash value over the years. These can be utilized by the policy owner whenever needs arise.

In contrast, term life policies do not carry any cash/surrender value. If the policy holder survives the term, there are no returns on premiums paid, unless it is a ROP term policy.

You can learn more about the differences between the two policies at Term vs. Whole Life Insurance.

Answer 3

Term life insurance is your basic life insurance policy in which you'll get the face amount in the event of the policyholder's death. The 'term' part of the name comes from the fact that the policy lasts for a particular number of years. While the policy is active, you'll be covered, but after it expires, you're left with no protection and no payout will be given if you then die.

Term life insurance only lasts for a specific number of years, but whole life insurance will cover you for the rest of your life as long as you've paid the full amount of premiums. It is radically different from term life insurance, because some of your monthly premiums are invested into shares, bonds and other investment vehicles. This acts as a 'cash value' savings asset that you can claim if you live longer than the length of your policy or borrow against the amount, but it makes whole life insurance policies more expensive than term life insurance policies.

Answer 4

They are the same thing. Whole/Permanent Life Insurance stays at the same monthly quarterly, semi-annual, or yearly premium; they don't go up or down. The Policy amount stays the same too. Ex. $50 per month for $50,000 worth of life insurance stays the same at the age it is purchased until the insured dies or until they outlive the policy; usually 99, 100, or 101... Whole LI also accrues cash value that can be borrowed against.