What is The Difference Between Whole Life vs. Term Life Insurance?

There are two basic types of life insurance: term life and whole life insurance.Term life insurance provides protection for a defined period of time and is often regarded as the most affordable type of life insurance. Permanent insurance products include whole life, universal or variable insurance; cash value products priced to provide lifelong protection.

Term Life Insurance

Term life provides protection during a limited number of years; expiring without value if you, the insured, survive the stated period of time which may be one or more years but usually is five to 20 years, because such periods usually cover the needs for temporary protection. If you die while your policy is in effect and all of the required premiums (guaranteed not to increase over the term of the policy) have been paid up to that point, your beneficiaries receive exactly the benefit amount you selected.

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Whole Life Insurance

Whole Life Insurance is also known as Ordinary, Standard or Permanent life insurance. Unlike term insurance, whole life insurance provides insurance coverage for your lifetime as the insured. Whole life policies also provide tax-deferred buildup of cash value, payable upon surrender or payment default.

Generally, permanent insurance has fixed premiums and death benefits. There are other types of permanent coverage, such as Graded Premium Life, Universal Life, and Variable Life offering variable premiums and death benefits.

For more information, read our article on Understand Whole Life Insurance

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