Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insur...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Aug 3, 2021

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The Brief

  • Term life insurance is generally the cheaper option between the two
  • Whole life insurance provides more benefits and lifelong coverage
  • When deciding between term life insurance and whole life insurance, you’ll need to consider your specific coverage needs

When it comes to life insurance, whole life insurance and term life insurance are two of the most common life insurance policies you can buy.

But what is the difference between term life insurance and whole life insurance? And is term or whole life insurance better?

Keep reading through our in-depth guide to find out everything you need to know about term vs. whole life insurance.

Trying to decide between whole life insurance and term life insurance? Enter your ZIP code to get free term vs. whole life insurance quotes from the top companies in your area.

How much are term vs. whole life insurance rates?

Both term life insurance and whole life insurance rates vary depending on several factors, including your health and health history, age, sex, and death benefit amount.

Look at the difference between term life insurance vs. whole life insurance rates for a 40-year-old man with good health:

  • Buying a $100,000 whole life insurance policy, he would pay $136/mo, but;
  • Buying a $250,000 term life insurance policy would only be around $23/mo despite the coverage amount being more than twice as much.

Keep in mind that, while term life insurance rates are often cheaper than whole life insurance to start, these rates will increase as you age. Whole life insurance is considerably more expensive to buy up-front, but it has level rates that will not increase as you get older or due to failing health.

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What is the difference between term vs. whole life insurance policies?

Term life insurance and whole life insurance are both very common insurance policies offered by most insurance companies. The key difference between the two is that, unlike a whole life policy, term life insurance is a type of life insurance policy that only stays in effect for a set period of time.

A term life insurance policy can last anywhere from 10 to 30 years and will deliver a payout to any beneficiaries you named on the policy if you die within the term limits.

While buying term life insurance doesn’t guarantee lower rates, term life insurance rates are generally cheaper than whole life insurance rates.

Whole life insurance is a type of permanent life insurance. This type of policy covers you until you die and has a cash value that can be invested.  Whole life insurance tends to be more expensive to buy than term life insurance, but it offers more security and fixed life insurance rates.

Term vs. Whole Life Insurance Pros and Cons

When it comes to term life insurance and whole life insurance, both policies have benefits and drawbacks. Let’s take a look at some of the pros and cons of buying term life insurance and whole life insurance below:

Term Life Insurance Pros and Cons

Term life insurance is generally a cheaper option than whole life insurance, and it offers guaranteed death benefit and accelerated death benefit options.

You can buy a term life insurance policy for anywhere from 10 to 30 years, and most term policies are convertible. Convertible term life insurance can be converted into whole life, which means you can continue coverage as long as you apply before your policy term ends.

However, term life insurance rates can increase over time and there is no cash benefit.

Whole Life Insurance Pros and Cons

Whole life insurance covers you until you die, so it’s the perfect option for anyone looking for long-term coverage. Your life insurance rates are fixed and won’t increase over time, either. You also won’t need to retake any medical exams if your health status changes, so you will be able to keep your coverage.

Further, whole life insurance builds cash value, which is a perk for anyone with an investment portfolio. Whole life also offers a guaranteed death benefit, and this death benefit is generally tax-free.

Although whole life insurance has many benefits, it’s a complicated policy and considerably more expensive than term life insurance is. It also doesn’t provide as much flexibility on the policy as term life insurance does.

Should I buy term life insurance or whole life insurance?

Life insurance policies aren’t one-size-fits-all. It’s important to consider your coverage needs and budget when choosing the right policy for you.

Term life insurance is suitable for individuals that only want coverage for a set period of time, and its affordable rates fit into any family’s budget.  However, whole life insurance is a permanent policy more suitable for people who need lifelong coverage, or those who have long-term dependents.

Whole life insurance is generally much more expensive than term life insurance, but it provides lifelong protection without increasing your rates due to age, health, or other risks. However, depending on the type of policy you have, you may be able to convert your term life insurance into whole life later on.

Both policies are good, but you’ll need to consider your budget, how much coverage you want, and how long you want your policy to cover you before you decide to buy term vs. whole life insurance.

If price is your biggest worry, consider term life insurance. However, if you are the sole breadwinner for your family or anticipate having health problems in the future, whole life insurance is your better option.

Start shopping for affordable term vs. whole life insurance now with our free quote comparison tool below. Enter your ZIP code for free life insurance quotes from term vs. whole life insurance companies in your area.