What is the difference between Term Life Insurance and Whole Life Insurance?

Susan

Georgetown, TX.

Susan,

The simple explanation is that term life insurance is just raw, basic

insurance. It pays cash to the beneficiaries upon the death of the insured person. Until that death occurs, the policy has no actual cash value. You can’t borrow against a term life policy and if you stop paying the premiums, you’ll have nothing to show for the premiums you’ve already paid.

The big advantage of term life insurance is that it’s the lowest cost way to get a large amount of coverage. For a few dollars, you can get many thousands of dollars worth of insurance.

Whole Life Insurance

Whole life insurance does build ongoing cash value. The longer you keep the policy, the more value it has. And this is real, cash value that you can borrow against if you get in a bind for cash. Although whole life insurance is more expensive than term life insurance, the returns you can get, in the form of increased cash value over the years, can be substantial.Which is best for you?

It all depends upon your particular circumstances. If you’re just starting out in life with a new family and you don’t have much money, term life insurance might be your best choice. You’ll get the most amount of protection for your family at the lowest cost.

Great Question.

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