Term VS. Whole Life Insurance

Q: We have been unable to make a decision between term and whole life insurance. What are the differences? What criteria should we use to make a decision?

A: If you ask the insurance companies, nearly all will suggest that whole life insurance is the way to go. Considering they are the ones selling the policies, you should wonder whether their advice is in your best interest. The product insurance companies wish to sell is the one that makes them the most money.

However, the one that makes the best sense for you depends on your needs.

Whole life insurance develops a residual or cash value. This money can be utilized for nearly any purpose at any time. Whole life insurance is also intended to last until death. There will be payout eventually, assuming the premiums are paid.

Term insurance only covers the individual during the period of the term. The insurance company is betting that death will not occur during this time.

Consider these differences between whole and term life insurance:

  1. Term life insurance is considerably less expensive. Term life insurance is only in effect for a limited period of time, the term. The fact that whole life also has a cash value contributes to the cost.
    • Many experts suggest purchasing term insurance and investing the difference. If you live past the duration of the term and your investments grow considerably, this is the best possible scenario.

  2. It really depends on your time horizon. This is usually the most important criteria when choosing life insurance.
    • Do you need insurance for 10 years or less? Term life is nearly always the best solution.
    • 10-20 years is really a toss-up. There are calculators available online to help you make the best decision.
    • Do you need the insurance for longer than 20 years? Whole life is usually the better solution long-term.

  3. Whole life can serve as an estate planning tool. This type of policy is commonly used by the wealthy to minimize estate taxes. The proceeds of an insurance policy go to the beneficiary tax-free.

Take the time to make the best decision for your family and financial situation. There are many reputable insurance salespeople and providers. Ask for references and get the professional assistance you need.


Engarde Financial Group is positioned to educate and serve its clients with other insurance coverages.

We understand that your personal items that you possess are of significance to you. Here at EFG we look at every situation differently. When it comes to your needs there is no such thing as one size fits all. Speak to a insurance professional today so that we can design a policy to cover all the things you love.

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