Term Life vs. Whole Life: What's the Difference?

If you've started researching life insurance, you've probably encountered two common terms:

Term Life Insurance and Whole Life Insurance.

So what's the difference?

Term Life Insurance

Term life insurance is designed to provide coverage for a specified period of time.

For example, you might purchase a 10-, 20-, or 30-year policy.

If the insured person dies while the policy is in force, the policy's death benefit is generally paid to the beneficiaries, subject to the policy's terms.

Term insurance is often considered when someone wants substantial protection at a relatively lower initial premium than permanent coverage.

It can be particularly relevant for people who want to protect:

• Income

• A mortgage

• Children

• Debts

• Family expenses

Whole Life Insurance

Whole life is a form of permanent life insurance designed to remain in force for life as long as the policy requirements are met.

Whole life policies generally include a cash value component and may have guaranteed elements specified in the contract.

Which One Is Better?

That's the wrong question.

The better question is:

Which type of coverage fits your goals?

Someone primarily looking for affordable income protection may have very different needs from someone looking for permanent coverage and cash value accumulation.

In some situations, a person may even consider a combination of different types of coverage.

Don't Choose Based on a Sales Pitch

Before purchasing a policy, understand:

• How long the coverage lasts

• What the premiums are

• What is guaranteed

• What isn't guaranteed

• What happens if you stop paying

• Whether the policy has cash value

• What happens if your circumstances change

The NAIC specifically recommends comparing policies and understanding which policy features are guaranteed versus non-guaranteed.

Need Help Comparing Your Options?

Lionheart Life can help you understand the differences and evaluate what may fit your situation.

Call 619-614-6469