Comparison on Term Life Insurance and Whole Life Insurance
Permanent life insurance: Continual protection
As you might have guessed by its name, permanent life insurance offers you coverage for your entire life. Under a permanent life insurance policy, your coverage will never expire and will never need to be renewed.
Although people often use the term "whole life insurance" to describe any permanent policy, it is, in fact only one type of permanent coverage. Variable and universal policies are also widely available, and are growing in popularity. (The difference between these policies mostly has to do with the amount of control a policyholder can exert over the way policy funds are invested by the insurer - more on that later).
With a permanent policy, the amount for which you are insured, also known as the death benefit, will be paid to your chosen beneficiaries at the time of your death - guaranteed. These policies also often have a "cash-value" or savings feature, and are sometimes called cash value life insurance because of this.
Term insurance: Affordable protection
The financial protection of a term life insurance policy, on the other hand, is limited to that policy's term, usually 10, 15, 20, or 30 years. These policies are less expensive, but they're not guaranteed for life. Once the policy's term is up, the policyholder's beneficiaries have no claim on a death benefit.
The cost of a term policy relies heavily on both the age and health of the insured, the length of the policy term, and the size of the benefit involved. Persons past a certain age, and subject to certain health risks may have trouble qualifying for term coverage.
So which one's right for you?
It's a question of both resources and goals. Term insurance offers an relatively inexpensive way to protect your dependants from financial hardship should anything befall you.
Permanent life insurance requires a lot more financial "ability" than term insurance, but its structure allows policyholders to use the money they've invested for many different purposes - as collateral on a loan, as business protection, etc.
