Term Life Insurance vs Whole Life Insurance
Pure death benefit for a fixed period, no cash value. Permanent coverage with a guaranteed cash value component.
What is the difference between Term Life Insurance and Whole Life Insurance?
Term = temporary need, cheap, no cash value. Whole life = permanent, expensive, builds cash value. The commission difference is the conflict of interest to watch for.
| Term Life Insurance | Whole Life Insurance | |
|---|---|---|
| In one line | Pure death benefit for a fixed period, no cash value. | Permanent coverage with a guaranteed cash value component. |
| Example | A healthy 35-year-old might pay $30-$50 a month for $1M of 20-year term. | The same $1M of coverage might run $800+ a month instead of $40. |
| Unit | Planning, Insurance & Estate | Planning, Insurance & Estate |
| Series 65 | Section 2: Investment Vehicles | Section 2: Investment Vehicles |
What is Term Life Insurance?
Covers a set term - commonly 10 to 30 years - at a level premium, paying only on death within that term. No investment component, and dramatically cheaper than permanent coverage for the same face amount. Fits temporary needs: income replacement while children are dependent, or a mortgage payoff.
What is Whole Life Insurance?
Lifetime coverage with a level premium and a cash value that grows on a guaranteed schedule and can be borrowed against. Far more expensive per dollar of death benefit than term. Legitimate uses are estate liquidity, special-needs planning, and permanent needs - not as a first-line retirement vehicle.