Term vs. whole life insurance

Term life insurance

• A type of life insurance that covers you for a set amount of time (e.g. 10, 15, 20, 30 years).
• You can choose the time length and your policy will automatically renew when the initial term length comes to an end. But your premiums (monthly or annual fees) may increase after you renew. The policy has an expiry date at which time it will end.
• Some term policies will let you convert to permanent life insurance.

Whole life insurance

• A type of permanent life insurance that covers you for your entire life.
• In most cases, your premiums are guaranteed to stay the same forever.
• Your policy will never expire, and you don’t have to worry about renewals.
• Some whole life policies even come with a savings component called a cash value.

Term life insurance

• It’s initially inexpensive.
• You can buy coverage to suit your needs, anywhere from $50,000 to $25 million.
• It’s easy to understand.

Whole life insurance

• Your coverage never expires, regardless of any future health conditions.
• The cost is guaranteed to never go up.
• Later in life, it can be less costly than term insurance.
• It can provide tax-preferred cash value growth opportunities.
• You can withdraw or borrow from the cash value. But there may be tax implications to doing so.

Term life insurance

• Your coverage is temporary. It ends when the policy expires.
• The cost goes up every time your policy renews.
• You can’t renew it past age 85.

Whole life insurance

• It’s initially more expensive than term life insurance.