Term Life Insurance is a temporary policy with very few moving parts. It has no cash value; pays no dividends; cannot be paid off early; and when the term is up, it goes way up in price, or else the policy simply ends. As such, it also usually costs less per thousand dollars of coverage than Whole Life costs.
Whole Life accumulates cash value that can be borrowed from, used to pay the policy premium in later years, or collected if the policy is surrendered. It may pay periodic dividends. Whole Life policy premiums can be paid over one's lifetime, or in one single premium, or over a set number of years. The biggest difference between Term and Whole Life is that Whole Life is permanent insurance that will last your "whole" lifetime.
With these features, Whole Life usually has a higher premium than Term Life, although it is possible that if you keep buying new Term policies throughout your life, the cumulative premium of Whole Life may be lower than the sum total of all the Term policies, especially if your health declined over the years.
That is a great question! It is actually probably the most common question I get. Term policies are perfect for people who have very tight or small budgets and need insurance, or that have a debt that they need to have covered for a short period of time.For example, let's say that you just graduated college, and have a lot of school debt to repay, and a starting salary job. A term policy that insures you until the loan debt is paid, or until you get a higher paying job is a great option. Or if you just had a baby, and want to increase your coverage to ensure that the baby's college expenses, and needs would be paid for if something were to happen to you, again is a good option. If your need is for something that is more permanent, that you know you won't outlive, and that will have a reserve of cash that you can draw from if needed, then you will want a whole life policy. They are more expensive then a term policy, but they are also going to pay out, providing you keep the policy in force, while the vast majority of term policies will end without ever paying. Term policies also will not have any cash value, should you need it, or wish to surrender the policy. Once you have a whole life policy, the prices are generally set, and do not change, nor can you be dropped from them. Finding affordable coverage once your term policy ends can sometimes be difficult, or impossible, if you've aged considerably, or your health has had some serious setbacks. I hope that helps, thanks for asking!
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Whole Life accumulates cash value that can be borrowed from, used to pay the policy premium in later years, or collected if the policy is surrendered. It may pay periodic dividends. Whole Life policy premiums can be paid over one's lifetime, or in one single premium, or over a set number of years. The biggest difference between Term and Whole Life is that Whole Life is permanent insurance that will last your "whole" lifetime.
With these features, Whole Life usually has a higher premium than Term Life, although it is possible that if you keep buying new Term policies throughout your life, the cumulative premium of Whole Life may be lower than the sum total of all the Term policies, especially if your health declined over the years.