Life insurance exists to replace income and cover expenses if you're no longer there to provide for your family. The two main types work quite differently.
Term life
Term life covers you for a set period, such as 10, 20 or 30 years. If you pass away during that period, the policy pays a death benefit. If the term ends, the coverage ends too.
- Lower cost for the amount of coverage
- Simple and easy to compare
- A good fit for covering a mortgage, raising kids or replacing income during working years
Whole life
Whole life lasts for your entire life as long as premiums are paid. It also builds a cash value that grows over time and can be borrowed against.
- Lifelong coverage and predictable premiums
- Cash value that builds in the background
- Higher cost than term for the same death benefit
- Often used for estate planning, final expenses or leaving a legacy
Which one is right?
Many families start with term coverage because it protects the most for the least cost during the years of greatest financial responsibility. Others add or choose whole life for permanent needs. The right answer depends on your budget, your dependents and your long-term goals.
Questions to bring to a conversation
- Who depends on my income, and for how long?
- What debts would I want paid off?
- Do I want coverage that lasts beyond a set term?