Compare
The Comparison
It’s difficult to compare the different types of life insurance and their features. The main types are term and whole life (also known as cash value) policies. Universal, Variable and Variable Universal are adaptations of the original whole life policy. Many of the characteristics are similar but the variances can make a marked difference.
Hopefully this table can assist in comparing your options:
Difference between Term & Whole Life
Term insurance only lasts for a specified number of years. The period can be anywhere from one to 35 years. The policy may offer guaranteed renewal options. It is less expensive than whole life and is said to be the purest form because no investment component is involved.
Each whole life policy has a cash account; some with internal rates of interest and others, variable security contracts, with flexible investment options. Whole life policies are intended for retirement planning. They are beneficial because cash builds tax deferred, which can be accessed through loans.
Because whole life policies require more funding, many people who buy whole policies life start off without an adequate face value, intending to accumulate this through the investment vehicle as time goes by. Unfortunately, this means their beneficiaries won’t be adequately covered if the insured dies ahead of time.
Experts recommend purchasing a term policy and investing surplus funds elsewhere, keeping life insurance and investment separate.