Best Life Quote

Term Versus Whole Life Insurance

Written By Doug Mitchell

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA.  Doug has spent close to 30 years in the insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health.  Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

Holly Mitchell  &

Holly Mitchell’s background in life insurance insurance goes back to 1985 when she worked for her father who was a New York Life agent. Holly has a marketing degree from Auburn University and has had a life insurance license since 2008. In addition to advising life insurance for customers all around the country, Holly is our website fact checker.

Rob Pinner   &

Rob Pinner is the founder and CEO of Pinner Financial Services servicing all 50 states. Rob started his insurance career in 2002.

Louis LaBash

Results-driven and innovative life insurance professional with 30 plus years of life insurance industry sales and marketing experience. Recognized as a pioneer in the field, leveraging phone and internet channels to exceed personal sales of over $100 million during the first decade of the 21st century. Creator of a highly effective intuitive IUL life insurance sales software that facilitated the sale of millions of dollars of indexed universal policies by numerous life insurance agents. Proven track record as a Managing General Agent (MGA), Life Agent, IUL Life Insurance Sales Software developer, and leading-edge creator of insurance marketing tools, educational content, and delivery systems.

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Life insurance is a type of thing nobody wants to pay for but is always glad they did when the need arises. In addition, it’s an integral part of any financial plan, especially when young children or dependents are involved.

Anyone that has loved ones who depend on them financially should not leave them without life insurance. Otherwise, they could be gambling with the future lifestyles – and financial promises – of those whom they care about.

Types of Life Insurance Coverage

Today, there are two primary types of life insurance policies in the marketplace.

These are term and permanent – and, within each of these categories, there are additional policy versions and structures that can be customized to better fit a policy holder’s specific needs.

Term Life Insurance

Term life insurance is a type of life insurance policy that has a set duration of coverage. This is typically a certain number of durations, including 10, 152025 or 30. Should the insured pass away while the policy is in force, the named policy beneficiary (or beneficiaries) will receive the set amount of death benefit.

This type of policy is considered to be the most basic type of life insurance that there is. This is because term life insurance offers only pure death benefit protection without any other bells and whistles such as cash value or investment options.

Term life insurance can be a good choice for those who are looking for affordable insurance protection. It may also be the right choice for those who are seeking coverage for a “temporary” need such as paying off a remaining mortgage balance over a 10 or 15 year period, or having coverage until the kids are self-supporting.

Whole Life Insurance

Permanent life insurance is essentially what its name suggests – life insurance coverage that may be purchased and maintained throughout a person’s entire life. Within the category of permanent life insurance, there are some different policy types.

life insurance forms

Unlike term which is pretty straightforward, permanent plans have more components. Shopping for permanent coverage isn’t quite as easy.

Let’s talk about these different types.

Permanent Life Insurance

Is considered to be the most simple form of permanent life insurance. This type of coverage offers a stated amount of protection for the entire life of the insured individual – provided that the policy’s premiums are paid that the policy is not lapsed or canceled.

Whole life insurance also provides a level amount of premium throughout the life of the policy. Therefore, the policyholder does not need to worry about the premium increasing – even if he or she contracts an adverse health condition.

This type of policy can also build up a considerable amount of cash value over time that the policyholder may borrow against or withdraw should they need the funds for any reason.

Universal Life Insurance

Is a specific type of permanent life insurance which offers low-cost insurance protection like term insurance, yet with a savings component similar to whole life insurance. Universal life insurance is known for providing a great deal of flexibility.

This is because, as the policy holder’s circumstances change, the primary insured can modify the coverage to keep payments affordable.

Variable Life Insurance

Provides permanent death benefit protection, along with a cash value component. However, with variable life, the policy holder’s funds are allocated to a separate account that contains investment vehicles such as mutual funds.

This can provide the policyholder with the opportunity to take part in market growth. It can also, however, expose them to additional market risk. I generally don’t recommend Variable Life due to the inherent risk it comes with.

While the premiums of permanent life insurance will typically start out to be higher than for a comparable amount of term insurance coverage, over time, a permanent policy can be the better choice for those who are seeking to also build additional savings and want coverage to last forever.

These types of plans are also the better option for those who are involved in estate planning, including those who are setting up special needs and other types of trusts, as it is important to have a policy that is permanent and will not have an ending date as a term life insurance policy does.

Whole vs Term Life Insurance

Now, let’s see how these two plans stack up against each other.

Cost: term insurance is the clear winner. It’s no competition — term will be two or three times cheaper than any type of permanent coverage.

Length: a whole life insurance policy will last longer. If you’re worried about qualifying for life insurance in the future, then whole is your best shot.

Benefits: term insurance doesn’t have any bells and whistles. It’s standard coverage. Permanent plans have a savings component or could have a possibility to invest as well.

There is no clear winner. It all depends on what you want out of coverage.

Maybe you’re okay with paying more, then a whole life insurance plan could be a wiser decision.

Final Thoughts, Whole or Term Life Insurance

In any case, prior to purchasing either type of life insurance, it is important to determine the amount of death benefit coverage that you will need. Doing so will involve estimating how much would be needed by your loved ones for covering potential expenses, as well as lost income over time.

Deciding which type you’re going to buy is only one of the many decisions you’ll need to make. After you’ve picked between term or whole, then you need to know how much coverage to buy. After you’ve looked at the numbers, you may decide you made the wrong choice type.

A life insurance plan is a long-term investment. If you buy whole life insurance, it’s the longest purchase you’ll ever make. There is a chance you will have the same plan your ENTIRE LIFE. If you’re going to have the same plan for this long, you want to guarantee you will have proper life insurance.

You can call and talk to our agents, get advice, and professional guidance for free. It won’t cost you anything to get the answers you want.

If you think you’re paying too much for your current plan, go ahead and give us a call. We will look at your current plan, assess your coverage, and see if we can find a cheaper option.

By starting with the death benefit in mind and comparing quotes on this page, it will be easy to figure out the right type of policy for you.

You can also call us to discuss quotes and apply for life insurance from the best life insurance companies available to you at 800-712-8519.

Picture of Doug Mitchell, CLU

Doug Mitchell, CLU

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA. Doug has spent close to 30 years in the life insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health. Some other notable items about Doug: Top of the Table Million Dollar Round Table member (MDRT). (MDRT is a global, independent association of the world’s leading life insurance advisors) | Premier Partner with Lincoln Financial and Cabinet Member | Served two years as President of the Auburn/Opelika Association of Financial Advisors | Life Millionaire status at Horace Mann Insurance Company and was awarded the Life Agent of the Year Award | New York Life, Executive Council Member | Currently serves as President of Ogletree Financial, a life insurance General Agency. | Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

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