Choosing the right life insurance policy can be confusing and stressful, as there are so many different policies and providers to choose from. In this term vs whole life insurance comparison, we’ll be taking a closer look at the differences between the two most common life insurance policies, as well as their benefits and drawbacks so that you can choose the right plan for you.
Whole life insurance
- Whole life insurance gives you the ability to borrow against the insurance policy for any future financial requirements
- Similar to death benefits, loans are usually tax-free
- Premiums can be locked in for life
- Whole life insurance is much more expensive than term life insurance
- If you need to end the policy within the first few years, you could be forced to pay surrender charges
- Your death benefit will be reduced by any outstanding loans.
Term life insurance
- Term insurance is often much cheaper than whole life insurance
- A term insurance policy is much simpler to understand than a whole life insurance policy
- You will only be offered protection during the term of the policy
- It cannot be used as a tax-planning or wealth-building strategy
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