Difference Between Whole Life and Term Life Insurance

Term life is “pure” insurance, whereas whole life adds a cash value component that you can tap during your lifetime. Term coverage only protects you for a limited number of years, while whole life provides lifelong protection—if you can keep up with the premium payments.

1. Why Whole life insurance is a bad idea?
2. What happens to term life insurance at the end of the term?
3. What is the difference between term and whole life insurance?
4. What is the disadvantage of whole life insurance?
5. Should I buy term or whole life?
6. Is it worth converting term to whole life?
7. When should you stop term life insurance?
8. Can you cash out term life insurance?
9. When should you buy term life insurance?
10. Is term life insurance a good investment?
11. What are the pros and cons of term life insurance?
12. How long is term life insurance?

Why Whole life insurance is a bad idea?

One of the biggest selling points of whole life, or permanent life insurance, is that it builds cash value you can borrow against. Many whole life insurance policies also pay dividends, but they aren't guaranteed.

What happens to term life insurance at the end of the term?

When you outlive your term policy, you will no longer have life insurance coverage—but you can convert to a permanent policy or buy new term insurance.

What is the difference between term and whole life insurance?

The biggest difference between term and whole life insurance is the length of coverage. Whole life insurance policies have no expiration date and are more expensive than term life because they also have a cash value component.

What is the disadvantage of whole life insurance?

Disadvantages of Whole Life Insurance

Whole life has higher premiums than term life in the early years, but unlike term policies where the premiums usually increase at renewal time, whole life premiums remain level.

Should I buy term or whole life?

The answer should be based on the reasons you need life insurance: Look at term life insurance if your life insurance need has a definite end, such as the years until you retire. Consider whole life insurance for longer-term financial planning goals, such as estate planning or funding a trust.

Is it worth converting term to whole life?

Converting a term life insurance policy to a permanent policy allows you to extend your coverage without going through the underwriting process. This can be a valuable option if your health changes for the worse.

When should you stop term life insurance?

Ultimately, you should keep your term life insurance for as long as you have a need for the insurance–children at home, a non-working spouse to provide for if you die, or to pay off a mortgage.

Can you cash out term life insurance?

No, term life insurance does not have a cash value

(These policies also go by whole life insurance, variable life insurance, and universal life insurance.

When should you buy term life insurance?

Buying life insurance in your 20s

Your 20s are the best time to buy affordable term life insurance coverage (even though you may not “need it”). Generally, when you're younger and healthier, you pose less risk to an insurer, which is why you're offered the most affordable rates.

Is term life insurance a good investment?

Short answer: it is. Term life insurance provides an affordable way to help financially protect your family. If you're asking yourself whether life insurance is worth it, the answer is simple. Yes, life insurance is worth it — especially if you have loved ones who rely on you financially.

What are the pros and cons of term life insurance?

Term Life Pros & Cons

How long is term life insurance?

Most term life insurance policies are 10, 20, or 30 years, but many companies offer additional five- or 10-year increments, sometimes up to 35- or 40-year terms. A term length should cover all of your financial obligations and outstanding debts.