Top pick: Sproutt
- Quotes from 40+ top insurers
- Up to $4 million in coverage
- Skip the medical exam
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
When you’re shopping for life insurance, you’ll come across two main types of policies: term and permanent. Term life insurance offers temporary coverage, so it’s cheaper and simpler, while permanent policies last your whole life and have a cash component.
Term life insurance covers you for a specified length of time. Many insurers offer term lengths in increments of five years — like 5, 10, 15, 20, 25 or 30 years. You can choose the term and how much coverage you want to buy.
These are the key selling points of term life insurance:
Whole life insurance is a permanent policy — meaning it lasts your whole life, as long as you pay your premiums. Like term life insurance, whole life insurance offers death benefits. And like all permanent life insurance products, whole life also includes a cash value component, which makes it more of an investment product.
This is what you need to know about whole life insurance:
These are the key similarities and differences between term and whole life insurance.
|Coverage for a set period of time|
|Premium stays the same|
|Guaranteed death benefit|
|Builds cash value|
|Eligible to earn dividends (if you’re with a mutual life insurance company)|
The right policy for you comes down to your life insurance needs and budget. To decide between term and whole life insurance, keep the following factors in mind.
Yes, you can own multiple life insurance policies at once — as long as you can afford the premiums and prove to your insurer that you have a need for them. If you think your financial obligations will change, look for a term life policy that has a conversion feature. These policies allow you to upgrade to a permanent policy within a certain time frame, usually within the first five years of the policy or before your 60th, 65th or 70th birthday.
CEO of True Blue Life Insurance
If you’re under 50 years old and in average health, I recommend you get a convertible term life insurance policy. At 50 years old, you can still get a 20-year term insurance plan and convert all or part of it to a permanent policy at any time.
If you’re over 50 and cannot qualify for a term insurance policy, then a permanent policy is the only option.
The only time I recommend a permanent policy to someone under 50 years old is when the client has already maxed out their IRA or 401(k) accounts. The reason I steer people away from permanent policies is that they cost 10 to 20 times more than term policies for the same coverage amount.
President & Chief Operating Officer of Vantis Life
If you have a significant amount of debt and other financial responsibilities like a mortgage, children and anticipated college and retirement expenses, term life insurance is probably the best solution. It offers the most death benefit protection at the lowest cost.
Whole life should be considered if you’re looking for lifetime protection and a way to create gifts for your beneficiaries, save for retirement or fund college expenses. It’s more expensive than term life insurance, but that’s because a whole life insurance policy builds cash value tax-deferred, that you can then borrow from tax-free.
Term life insurance tends to cost four to six times as much as whole life insurance. It’s cheaper because you pay for the coverage you want, and it’s designed to expire when you don’t need it anymore. While life insurance rates are individualized, let’s talk averages.
According to our research, a healthy, nonsmoking 30-year-old might be charged $13 a month for a $250,000, 20-year policy. In comparison, that same person might pay $205 a month for a whole life policy.
*Based on sample rates from Policygenius, August 2019.
Term life is often the best pick for most considering life insurance because it’s cheaper, easy to understand and covers you while you’re paying off big debts. Compare term life policies from top companies.
Term or whole life insurance may not be the right fit — but there are plenty of other life insurance options. Explore these alternatives:
Term life insurance is a solid choice for most people, and especially for those whose financial obligations won’t last forever. If you can afford the higher premiums and want to treat your policy as a cash asset, you might want to look into whole life insurance. Either way, compare life insurance companies to find the best possible policy and rate.
Access an intuitive app, wide coverage and few exclusions when Waffle’s car insurance drops in late July.
Discover which exchange is better suited to cryptocurrency trading after comparing things like fees, security and features.
A final expense life insurance policy may be your best option in your 70s, especially if you have prior health problems.
This insurance shopping tool compares 100+ companies and prefills your quote forms.
Learn the basics of these two stock types that offer company ownership, but with unique differences on shareholder voting rights, payouts and more.
Existing users can get a discount, but coverage is only offered in Arizona for now.
Safe drivers and electric car owners could see cheap rates, but its claims process isn’t perfect.
Get a low-cost policy for liability expenses that exceed your car or home insurance coverage.
Learn about what will happen to your home loan when you die and how to avoid any nasty situations with some pre-planning.
Receive extra liability coverage with an umbrella policy from these top insurers, though they may require you to have car insurance through them.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.