Difference Between Whole-Life & Term-Life

Something that I hear on a regular basis is “I want that Term policy they were talking about on the TV,. You know, the one for pennies a day?” 
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So let’s talk about it!

Term Life insurance has its place in the market just as Whole Life does. In this article, I would like to explain the differences so that you can make an educated decision as to what type of plan fits your needs. 

There are some myths in the life insurance industry. One being “cheaper is better”, but this couldn’t be further from the truth. Term life insurance may appear cheaper, however, if it is not in line with what you are looking to achieve then what good is it?

Let’s dive right into this.  I like to first look at the words. TERM and WHOLE-LIFE. Right off the bat I see a big difference.

Term, comes from the word ‘temporary’ and that is exactly what it is: a temporary life insurance policy that covers you for a short duration of time. Once that time expires, you no longer have a policy and all the money that you paid into that plan is gone. The only upside is that if you pass away during the short duration of the policy, the company will pay a claim to your beneficiary. With that being said, over 95% of term policies do NOT pay out!

This is due to 2 major reasons: 
1: The policy premium does not get paid in a timely manner and therefore the policy is cancelled due to non-payment, or 
2: You simply out live the duration of the policy 

A term policy is really only designed for a few specific reasons, mortgage protection or income replacement. Why? Because you have a defined term or duration that you need to be covered for a specific amount. After that term you no longer need the coverage. 

Let's look now at Whole Life. 

​I love Whole Life because it is very straight forward. In fact, it is the original form of life insurance. Whole Life will cover you for your entire life, regardless of how long you live. And if you are blessed enough to live to be 100 years old, you get a big birthday present: the face amount of your plan!
This type of plan accumulates cash value. This simply means that some of your premium is going into a separate account to be borrowed against, help make premium payments in the event you cannot pay at some point, pay your policy up, or obtain a surrender value. -Term does not build cash value at all.- 
The biggest feature about this type of a policy, whole life, is that it is a permanent plan of insurance.

Now that you know the difference, you can make a better decision as to what type of plan fits your needs the most. 

All the best,
Doug Blake
Senior Partner at Senior Life Insurance Company