The Pros and Cons of Term and Whole Life Insurance

iQuanti: Purchasing life insurance is a vital step you can take to ensure your family and loved ones' financial security. As you learn more about life insurance, you'll find that one of the most important decisions you'll make in the process is whether to opt for term or whole life coverage.  

A term life insurance policy distributes your coverage over a predetermined period of time, usually between 10 and 30 years, whereas a whole life insurance plan lasts the entirety of your life. But the differences between term and whole life insurance don't end here, so let's take a closer look at each option's upsides and downsides. 

Term life insurance pros

Here are some pros of term life insurance:

• Affordability: Term life insurance plans are relatively inexpensive, and often have much lower premiums than whole life insurance policies. This can make them a more affordable option for many customers. 
• Cancelable without penalties: Term life insurance can be canceled at any time without the policyholder incurring extra fees or penalties. This can be useful if you've gone through a major life event and need to readjust your finances or insurance plans. 

Term life insurance cons 

Term life insurance also comes with some drawbacks, such as:

• Coverage expiration: Once you've finished the period of time allotted by your term life coverage, you won't get back the money you've spent on premiums. This means your beneficiaries cannot access your death benefit once your coverage ends. 
• No cash value: Term life insurance does not give policyholders the ability to accumulate cash value, so this policy can't be used to build wealth over time.

Whole life insurance pros

Here are some advantages that whole life insurance offers:

• Coverage does not expire: As its name implies, whole life insurance has coverage that lasts the entirety of your life. This feature can be extremely useful for policyholders that need long-term coverage, such as those who will always have dependents in their home.
• Cash value: A unique feature of whole life insurance policies is their ability to accrue cash value alongside the conventional payout sum of most life insurance policies. This cash value essentially acts as a savings account, accruing interest over time. 

Whole life insurance cons 

Here are some cons of whole life insurance: 

• Expensive premiums: Whole life insurance policies are often more expensive than term life insurance premiums. While whole life insurance policies compensate for this difference by building cash value, the cost of these premiums may make it difficult to keep up with life insurance payments. 
• Fees: If you cancel a whole life insurance plan, you may face additional fees or charges. 

The bottom line

Term and whole life insurance both come with their own benefits and drawbacks. The right life insurance choice plan for you and your loved ones may depend on a number of factors, including your financial situation and your family's needs. 

There is no one-size-fits-all, so make sure to research your options and pick the life insurance plan that best suits you and your loved ones. This way, you can give your family the security they need and give yourself the peace of mind you deserve.