Compare Term vs Whole Life Insurance Plans

term vs whole life insurance

In the world of life insurance, people often want to compare term vs whole life insurance. Term life insurance and whole life insurance are the two most common types of life insurance. When people are deciding which type of insurance meets their needs the most important factors are their health and stage of life. This determines the outcome when comparing term vs whole life insurance. 

What is life insurance?


Insurance is a financial protection against loss. There are all types of insurance- health, auto, home, travel, personal property, and more. In all these cases, the insurance is used for an exact type of protection. A premium is charged for the insurance company to pay for the item insured in the event of damage or loss. In the case of life insurance, the thing being insured is of the greatest value- a person- and the payout from an burial insurance company isn’t going to bring back a loved one but it does provide peace of mind and financial provision for the family left behind. When a person purchases life insurance, they decide on an amount that would be paid to a beneficiary when they die.

In exchange for paying out this death benefit, the life insurance company charges a monthly premium to guarantee that they will pay out the death benefit for the insured upon their passing. This function is the one thing that all life insurance policies have in common- there are payments made to secure the payout of a death benefit. Beyond this commonality, life insurance programs greatly vary in nature. There are many types and structures of life insurance plans but most people are interested in comparing term vs whole life insurance.

What is term life insurance?

Term life insurance is a life insurance that protects the client for a set period of time called a term. Common term lengths are 10, 20, and 30 years. Term life insurance policies can be written for vastly different amounts of coverage ranging from $10,000 into the millions. Once the insurance benefit is chosen and the application completed, term life insurance plans require some type of medical exam because rates are based on the age and health of the patient and the monthly rate varies greatly even for just a minor health problem.

The medical exam usually includes blood work and at times, a client can discover a condition or indicator they weren’t aware of such as a higher cholesterol count than expected or flags for liver function. Sometimes these situations are temporary due to a run of medication so blood work can be repeated if appropriate.

Sometimes a person can be turned down for term life insurance due to poor health. Once the blood work and exam results are submitted, if approved, the client’s monthly premium is confirmed and the term life insurance policy is initiated. The turnaround time for this process is 30-60 days. Upon submission of the first monthly payment, the policy is in effect and stays active as long as payments are made until the selected term amount runs out. Should the client die during that time, the insurance company pays the beneficiary the death benefit.


What is whole life insurance?

Whole life insurance is a type of life insurance that protects the client for their WHOLE life. The policy never runs out, is not cancellable unless payments aren’t made, and the monthly premiums are never raised. Whole life insurance can be written in amounts ranging from $2000 to $50,000. Applications for whole life insurance policies usually have simple yes or no questions and can be completed quickly. The approval process is instantaneous and there are no medical exams required.


Premiums are based on the age and health of the client and coverage can start immediately but sometimes due to poor health, there is a gradual increase in coverage over two years or even a full two year waiting period. The good news is that everyone under 85 years old qualifies and is approved for some type of whole life insurance coverage. No one under 85 years old is declined. Once the application is approved and payment is made, the policy becomes active. The turnaround time for whole life insurance can be as quick as a few days.

Term vs Whole Life Insurance- which do you need?

Now that you understand the difference between term and whole life insurance, it can still be challenging to figure out which one meets your needs. Here are some key factors when comparing term vs whole life insurance.


What stage of life are you in?  This is the number one factor that influences whether you need term insurance or whole life insurance.  The reason is the amount of coverage each type of policy is designed for. Term policies range from $10,000 into enormous policies that can be several million dollars compared to whole life policies typically capping out at $50,000 at most. Consider a 30 year old young married with two children at home compared to a 55 year old couple whose home is almost paid for and children are married with their own families. These two scenarios mean completely different insurance needs. If the 30 something husband or wife dies, they would be leaving their spouse responsible for a large mortgage, daily provisions for family, college funds, and more. On the flip side, if one of the older spouses dies, their children are raised and home is almost paid for meaning they have much smaller need for what their death benefit would pay for when they die.

Generally, while you are still raising children or have a great deal of debt, term life insurance is the better choice. Later in life, as empty nesters, a whole life insurance policy usually meets your needs perfectly. Of course, there can be variables that change either side such as health problems, budget, and adding on to existing policies so there is certainly flexibility when considering your options.

Whole Life Insurance Pros & Cons

  • Policies last your WHOLE life – Pros
  • Premiums payment are paid for your entire life – Cons
  • Monthly payments never change – Pros
  • Payments are higher monthly than term insurance – Cons
  • Policy builds cash value – Pros
  • Cash value builds slowly over the years – Cons

Do you have health problems that will affect approval?  

Your health along with age are the two main determiners of getting approved for life insurance and what your monthly premiums would be. Term life insurance has stricter parameters for approval and the rates are raised for even small health flags. There is a medical examiner who will confirm the answers you provide on your application and do a general exam and take blood. All of that goes into whether or not you get approved for term life and at what level they will charge the monthly payment. Sometimes applicants are turned down for term life insurance due to health problems.

Whole life insurance has broader guidelines for health restrictions and all applicants under 85 years old are approved for some type of coverage. Thankfully those who are turned down for term insurance or classified with higher monthly premiums can consider burial life insurance as a good alternative so their families are still protected with some type of monetary provision upon their death. This means that along with your stage of life, the other important consideration is your health when looking at term vs whole life insurance. 


It can be a little overwhelming to consider the options when applying for life insurance. The important thing is that you are considering the options because it is easy to put off one of the most loving protections you can have in place for your family- giving them peace of mind financially if you should die. It isn’t a popular topic of conversation but it is a necessary one when you have a responsibility to those you love and want to provide for. Remember the two starting points when looking at term vs whole life insurance- your stage of life and current and past health profile. Then decide what first step to take and TAKE IT! No one plans their death and it is hard enough on families without the added burden of financial worry. Take that first step of protecting your family with a Call us at 888-510-1381 now.