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Term vs. whole life insurance: how to choose

Both term life and whole life offer advantages and excellent coverage. Let’s look for the features that are most important to you.
April 19, 2023
4 min read
A couple uses their laptop at the dining table to review their policy insurance online

Term life insurance and whole life insurance each have important benefits to consider, and it may come down to your specific goals and which stage of life you're in. Not sure which to choose for you and your family? Let's take a look at the differences between the two, so you can make an informed decision based on your needs.


What is term life insurance?

Term life insurance isn't permanent but a type of temporary life insurance. It lasts as long as you pay your monthly premiums and uphold the terms of the contract. For example, you coul buy term life insurance that lasts 10 years, 20 years, or more. This type of insurance is designed to help keep you protected during those years. But if you outlive the terms of coverage and you want your insurance to continue longer, you'll have to renew the policy. As you consider insurance coverage, keep in mind that not all policies are eligible for renewal. Also, some policies are based on your health and age at the time your coverage begins. So, renewing an eligible policy could cost you more than your original coverage. 

Term life insurance is typically designed to work best for a limited time. Some people only need life insurance for a brief period. For example, sometimes parents will purchase term life insurance that will last only until their children become working adults. These parents want to make sure that if something happens to them when the kids are young, there will be enough money to take care of their kids' needs. But once the children leave school and start their careers, the parents might choose to drop their term life insurance.

There are other reasons people choose term life insurance. Homeowners might keep their term life insurance until they've made their last house payment. If they die before they have outright ownership of the home, the money paid out by their insurance could help ensure that their family could continue to make payments on the house. This could help the family adjust as they'll no longer have income from the policy owner.

Term life insurance is also designed to be generally less expensive than whole life insurance because of the set number of years of coverage. Some families may find that they could more easily afford the low monthly payments of term life insurance. If term life insurance coverage is about to end, and your needs have changed, you may have the option to transition to whole life insurance—which takes us to our next topic.


What is whole life insurance?

If you pay your monthly premiums, whole life insurance is designed to last the rest of your life, unlike term life insurance. That means that you won’t have to worry about renewing your coverage. Also, most life insurance companies will not cancel your whole life insurance if you develop health problems such as cardiovascular, behavioral, or blood disorders, to name a few. As long as you keep your monthly payments up to date, your insurance will remain active. That could be a comforting thought if you worry that you could develop a serious health issue that runs in your family as you get older.

If you don't make changes to your whole life insurance coverage, you most likely won't experience unexpected or sudden changes to the amount you pay each month. However, the amount that you pay each month for term life may increase as you get older. Overall, you may spend more each month for whole life than term life, but in many cases, you'll be able to know the cost in advance.

Another reason some families choose whole life insurance is that it includes a cash account that gains interest. A small amount of the money that you pay each month is placed in a separate cash account for you. In time, it may be possible for you to borrow money from your account.

Usually, the loan's interest rate will be lower than on a typical bank loan, but it's still important that you repay the loan as soon as possible. If you haven't repaid the loan at the time of your death, the outstanding loan balance and interest will be subtracted from the death benefit paid to your loved ones.


Which type of life insurance may be best for you?

Both term life and whole life offer advantages and excellent coverage. We've highlighted the key differences in the chart below.

Look for the features that are most important to you, then choose the life insurance that meets the needs of your family. Call or contact TruStage™ today to get started with the term life or whole life insurance of your choice.


 Features Term Life Whole Life
Pays death benefit

Coverage for a set period of time

Fixed monthly payments for life  

Might allow borrowing against policy  

Can't be cancelled due to health*  

Less expensive


*Some policies are subject to a two-year contestability period.

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