Yes, typically from a premium stand point term life is much cheaper than whole life. The reason is term life insurance has a shelf life or expiration date. You are essentially "renting" the coverage. The premium is guaranteed level for a certain period of time such as 10-20-30 years and then it will either expire or have steep premium increases.
Whole life premiums are plans designed to be level for your whole life. You will see whole life plans guaranteed to ages 90-95-105-121-150. Naturally to insure that type of guarantee the premiums will be much more expensive than term life rates. Also, whole life insurance has a value add of cash value that accumulates that can be used for things like retirement, college funds or an unexpected critical illness. Term life is just a death benefit.
Term life insurance is almost always cheaper then whole life in the short run. Over the course of one's lifetime, if the insured keeps purchasing a new term policy when the old one ends, they may find that the cost of whole life (locked in while young and in good health) could beat the cumulative term prices.
One time when whole life prices can actually start out better than term is for persons with serious health conditions. Sometimes getting simplified issue whole life is the safest and cheapest way to go.
As a general rule, yes. If you are comparing equivalent face amounts (death benefit) on both a term policy basis and a permanent/whole life life insurance policy basis one would expect the term policy to cost less. This lower cost for term life insurance reflects that these types of life insurance policies; 1) present less risk because they are in effect for only the designated period of the policy's term, 2) no permanently paid up units of life insurance risk are being purchased through this policy to present a long term risk after premium payments cease, 3) the policy does not build up any cash value that can be returned to the policyholder or taken out as a loan, 4) investment proceeds from the policyholder's premiums are retained by the life insurance company. These are among the primary factors explaining why term life insurance is less expensive the permanent life insurance (whole or universal).
Yes, term is less expensive that whole life insurance. Term is temporary insurance and whole life is permanent insurance. Term is like renting a home and permanent is like owning a home. Whole life which is permanent insurance also builds some cash value in which term insurance does not build cash value.
Yes it is cheaper, but you must die to collect. Insurance companies work on the law of large numbers. The know that if they insure healthy people for a given period of time, so few will die that the company will make money. The older you are, the greater the cost. Note that term life insurance purchased at age 60, may NOT be less expensive than whole life purchased at age 30.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
A whole life policy usually pays a death benefit. A term life policy rarely pays a death benefit. Term insurance becomes most expensive when you need it most. A whole life policy charges the same premium throughout your lifetime. When you add up the premiums for a whole life policy, the death benefit is almost always much greater. Since term policies rarely pay death benefits, the term policy is all cost.
As others have said, Yes term life insurance premiums are CHEAPER than permanent life insurance premiums but it may not be the best value. The only reason it can be cheap (everyone will die one day) is that a very low percent of term policies will actually pay a death benefit claim. It has been described above as temporary like renting. Perhaps a more accurate description would be a "premature death policy" because if you live a normal life expectancy or longer you will die without a term life insurance policy enforce to pay a death benefit. Think of life insurance as a tool to meet a need and cheap takes on a clear meaning. If you have a temporary need for a specific purpose you will out live then it may work well for you. If you have a permanent need or would like to see your premium money returned in some way in the future, consider investing in a better tool.
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Whole life premiums are plans designed to be level for your whole life. You will see whole life plans guaranteed to ages 90-95-105-121-150. Naturally to insure that type of guarantee the premiums will be much more expensive than term life rates. Also, whole life insurance has a value add of cash value that accumulates that can be used for things like retirement, college funds or an unexpected critical illness. Term life is just a death benefit.
One time when whole life prices can actually start out better than term is for persons with serious health conditions. Sometimes getting simplified issue whole life is the safest and cheapest way to go.