What is the difference between term and whole life insurance?
Short answer: Term life covers you for a set period (usually 10–30 years) at a low price and has no cash value. Whole life covers you for your entire life, has fixed premiums, and builds guaranteed cash value — but costs significantly more.
Term life insurance provides coverage for a set period, typically 10, 15, 20, 25 or 30 years. If you pass away during the term, your beneficiaries receive the death benefit. If you outlive the term, coverage ends. Because it covers a limited window and builds no cash value, term is the most affordable way to buy a large amount of coverage.
Whole life insurance provides lifelong coverage with a cash value component, a fixed death benefit and premiums that never change. Policies from mutual companies may also pay annual dividends. The trade-off is price: whole life premiums are often 10 to 15 times higher than term for the same death benefit.
Many families use both: a large term policy to protect income during the working and child-raising years, and a smaller whole life policy for permanent needs like final expenses, an inheritance or estate planning.
| Term life | Whole life | |
| How long it lasts | 10–30 years | Your whole life |
| Cost | Lowest | Significantly higher |
| Cash value | None | Guaranteed growth |
| Premiums | Fixed for the term | Fixed for life |
| Best for | Income replacement, mortgage, kids | Permanent needs, legacy, estate |
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