What is the difference between term life insurance and whole life insurance ?

Difference between term life insurance and whole life insurance: - Term life insurance is temporary coverage, no cash value, renewable, and affordable. - Whole life insurance is permanent coverage, accumulates cash value, has level premiums, and is more expensive.

What is the difference between term life insurance and whole life insurance?

Term life insurance and whole life insurance are two different types of life insurance policies that offer different benefits and protection. Here are some key differences between the two:

Term Life Insurance

  • Temporary Coverage: Term life insurance provides coverage for a specific period, such as 10, 20, or 30 years. If the insured person passes away during the term, the death benefit is paid to the beneficiaries. If the insured person outlives the term, there is no payout.
  • No Cash Value: Term life insurance does not accumulate cash value over time. It is purely a death benefit policy.
  • Renewability: Some term life insurance policies can be renewed at the end of the term, but the premiums will increase based on the insured person's age and health status.
  • Affordable: Term life insurance is generally more affordable than whole life insurance because it only provides temporary coverage and does not accumulate cash value.

Whole Life Insurance

  • Permanent Coverage: Whole life insurance provides lifetime coverage as long as premiums are paid. The death benefit is guaranteed to be paid to the beneficiaries upon the insured person's passing.
  • Cash Value Accumulation: Whole life insurance policies accumulate cash value over time, which can be borrowed against or used to pay premiums.
  • Level Premiums: Whole life insurance premiums are typically level and do not increase over time, making it easier to budget for long-term financial planning.
  • More Expensive: Whole life insurance is generally more expensive than term life insurance because it provides permanent coverage and accumulates cash value.

In summary, term life insurance provides temporary coverage at an affordable cost, while whole life insurance offers permanent coverage and cash value accumulation at a higher cost. The choice between the two depends on individual needs and financial goals.