Term life insurance and whole life insurance differ primarily in cost, coverage duration, cash value features, and complexity.

Term Life Insurance

• Coverage Length: Provides coverage for a fixed period, typically 10 to 30 years (sometimes up to 40 years). If the insured dies during this term, the beneficiary receives the death benefit. If the term expires while the insured is still alive, there is no payout

• Cost: Generally much more affordable than whole life insurance because it only covers a limited time and does not build cash value

• Cash Value: Does not accumulate cash value; you cannot borrow against or withdraw from the policy while alive

• Simplicity: Straightforward coverage with fixed premiums and death benefit amounts; easy to understand and manage

• Best Use: Suitable if you need coverage for a specific period, such as while raising children or paying off a mortgage. It can also supplement whole life insurance for covering large debts

Whole Life Insurance

• Coverage Length: Provides lifelong coverage as long as premiums are paid, often lasting until age 100 or beyond

• Cost: Significantly more expensive than term life insurance due to permanent coverage and cash value component

• Cash Value: Builds cash value over time at a guaranteed fixed rate, which can be borrowed against or used to pay premiums. However, loans or withdrawals reduce the death benefit if not repaid

• Complexity: More complex policy with investment features and potential dividends; premiums remain level but the death benefit can be affected by outstanding loans

• Best Use: Ideal for those wanting lifelong protection and a savings/investment component that can serve as a tax-advantaged retirement asset

Summary Table

Feature| Term Life Insurance| Whole Life Insurance
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Cost| Lower premiums| Higher premiums
Coverage Length| Fixed term (10–30 years)| Lifelong coverage
Cash Value| None| Accumulates cash value
Complexity| Simple, fixed premiums and benefit| More complex with savings and loans
Best For| Temporary coverage, budget-friendly| Permanent coverage, savings component

In essence, term life insurance is simpler and more affordable but only covers you for a set period without cash value. Whole life insurance is more expensive and complex but provides lifelong coverage and builds cash value over time