Deciding which life insurance policy you should choose can be nerve racking when you are given multiple options. This is a simple guide to understanding the differences between whole life and term life insurance.

1. A SIMPLE GUIDE TO
UNDERSTANDING
WHOLE LIFE AND TERM
LIFE INSURANCE
ROBERT TAUROSA

2. TERM LIFE INSURANCE
OFTEN CALLED “PURE” LIFE INSURANCE, IT PROVIDES A SET
BENEFIT TO BENEFICIARIES UPON THE INSURED’S DEATH
DURING THE TIME THE POLICY IS ACTIVE — THE TERM — SUCH
AS 10, 20 OR 30 YEARS.
TERM INSURANCE DOES NOT ACCUMULATE ANY CASH VALUE.
A TERM POLICY ENDS WHEN THE INSURED DIES OR THE TERM
EXPIRES.
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3. TERM LIFE INSURANCE
The simplicity of term life makes it easy to set up. It is much cheaper than
whole life. One can purchase more coverage with a term policy for less
money than a whole policy.
After a term policy ends, the insured may need to renew the policy or
purchase a new one with higher premiums due to age and medical issues.
Hopefully, the insured will have built wealth over the policy’s term and will
not need as much coverage when the policy terminates.
Term life is suitable for those who currently have high financial
responsibilities but little savings and investments.

4. WHOLE LIFE INSURANCE
WHOLE LIFE INSURANCE IS WHAT ITS NAME IMPLIES:
COVERAGE FOR THE INSURED’S ENTIRE LIFE PROVIDED THE
PREMIUMS ARE PAID.
IT IS ALSO CALLED STRAIGHT OR ORDINARY LIFE INSURANCE.
WHOLE LIFE IS ONE OF SEVERAL TYPES OF PERMANENT LIFE
INSURANCE.
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5. WHOLE LIFE INSURANCE
Whole life insurance provides a death
benefit and an opportunity for
accumulating cash value. The type of
policy determines how the cash value
builds. While the policy is in force,
the death benefit diminishes as the
cash value portion increases. The
cash value may be borrowed,
withdrawn during retirement or used
to fund the policy.

6. SUMMARY
While term life is more feasible for most individuals, whole life is suitable
in some cases. The cash value benefits people with complex financial
issues. Also, some appreciate the convenience of combined insurance and
investment. However, whole life usually costs up to four times as much as
term.
Individuals and families should assess their financial assets, obligations
and goals to discover the best life insurance option.