Term vs whole life insurance: find the best fit for your needs

The term relates to the length of time your policy is active, so if you have a 10-year term, you’re covered for those 10 years. If you die during that time, your loved ones get paid the death benefit. Once the policy ends, your coverage does too, so you’ll need to think about extending or getting a new policy if you still want to be covered.

Term life insurance doesn’t build value and it doesn’t have a cash value. This is because your premiums pay only for insurance (and not investments too, like whole life coverage). This means the premiums are less expensive, but you don’t get anything back when your coverage ends.

There’s no easy answer to this. It depends on the kind of life cover you need, what stage of life your dependents are at, and how long you want your coverage to last. It’s a good idea to start by thinking about your current circumstances: are you ready to sign up for fixed monthly premiums indefinitely? If yes, you can look into a whole life insurance policy, which involves paying into insurance coverage plus savings. If the answer is no, you should consider the lower-cost alternative: term life insurance, which offers you coverage for a set number of years.

Weighing out whole life vs term life is like comparing apples and oranges! They both offer different things. Whole life tends to be more expensive, often has a cash value component built in, and is more permanent. Term life insurance tends to be more budget-friendly, does not include savings, and lasts only for a fixed period of time. Term life policies are generally more straightforward and easier to understand and manage because they don’t come with any of the investments or tax issues that accompany whole life.

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