Life Insurance FAQ
Term vs whole life insurance: which is better?
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The short answer
Term life is affordable pure protection for a set number of years, ideal for covering a mortgage or raising kids. Whole life covers you for life and builds cash value, but costs several times more. Most families start with term.
How term life works
Term life covers you for a fixed period, typically 10, 20, or 30 years, and pays a death benefit if you pass away during the term. It has no cash value, which is why it is the most affordable option.
It is the best fit for a specific financial obligation like a mortgage or the years you are raising children. A healthy 30-year-old can get $500,000 of 20-year term for around $18/month.
How whole life works
Whole life covers you for your entire life, not a set term, and builds cash value you can borrow against or withdraw. Premiums stay level, and the death benefit is guaranteed as long as you pay.
Because of the lifetime coverage and cash value, whole life costs several times more than term for the same death benefit.
Which should you choose?
If your goal is protecting your family during the years they depend on your income, term life gives you the most coverage for your budget. Whole life makes sense for lifelong needs, estate planning, or building cash value you want access to.
Many families start with term and add whole life later if their situation calls for it.
Related questions
Is whole life worth the extra cost?
Whole life is worth it if you want lifetime coverage and cash value, often for estate planning or a guaranteed death benefit. For pure income protection at the lowest cost, term life is usually the better value.
Can you convert term life to whole life?
Many term policies include a conversion option that lets you switch to a permanent policy without a new medical exam, often at the end of the term or when a qualifying life event occurs.
Which is cheaper, term or whole life?
Term life is significantly cheaper for the same death benefit, because it covers a set period and builds no cash value. Whole life costs more but lasts for life and accumulates savings.
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