Term Life & Whole Life Insurance: What is the Difference

by pattylee0 » Wed Dec 17, 2008 06:07 am

Can any one explain me, i wanted to take insurance policy for my mother. Can any one explain me how term life is different that Whole life insurance.

Total Comments: 60

Posted: Wed Dec 17, 2008 11:43 am Post Subject:

Term life plan as the name suggests will offer coverage for a limited period, say for 20 years or 30 years. This form of insurance is pretty common.

Whole life plan offers coverage for the entire lifetime of the policy holder for which the policy holder is required to pay fixed premium for the entire period of the policy and failing which may lapse the coverage.

Posted: Wed Dec 17, 2008 11:44 am Post Subject:

Oh! another important difference between term life and whole life is that, term life is comparatively cheaper than the whole life plans. you can read further about the different types of life insurance policies in the following thread.


Posted: Wed Dec 17, 2008 02:06 pm Post Subject:

Term life insurance offers you temporary life insurance protection for a specific number of years. Usually, term life is available for 10, 15, 20, or 30 years.

Term life has no cash value that builds up within the policy, it is not an investment.

Term life usually costs alot less than permanent life insurance, depending on your age.

Permanent life insurance is lifetime coverage, as long as you pay your premiums. It builds cash value, but costs more. You may be able to take a loan out from your cash value within the policy.

You can review this article explaining [removed - no promotional url please]term life insurance vs permanent life insurance for a complete review of the advantages and disadvantages of both plans.

Posted: Wed Dec 17, 2008 03:40 pm Post Subject:

TERM Life: there is no 'cash-value' for this, is there?

Return of Premium Term Life Insurance returns all premiums paid at the end of the term.

So if you bought a 30 year ROP term plan at the end of the 30th year you'd get back every penny paid in premium.

The premium is higher for these plans, however, if you took the difference between regular 30 year level term and a 30 ROP term plan and put it in savings you'd have to earn about 7% after taxes on that money to equal the same dollar amount value of getting all your money back.

30 year ROP term is typically only issued up to age 50.

Posted: Fri Dec 19, 2008 05:22 am Post Subject: insurance

Thanks, GARY. I din't know there was 'sub-policies', (lack of a better word) within the Whole Life Insurance. So.........what if I DID get this ROP, and I wanted to 're-new' it after 20 years(?). Can I still get the premiums back, that I put into it?

Posted: Thu Jan 01, 2009 06:11 pm Post Subject:

These are very basic definitions of term and whole life:

Term Life Insurance

A life insurance plan that provides death benefit protection only and for a specified period of time (term). The policy pays benefits only if the insured dies during the term.

Whole Life Insurance

Permanent insurance which provides, at minimum, a level death benefit upon the insured's death, or a cash endowment upon policy maturity that is equal to the death benefit. In addition, these policies accumulate cash values on a tax-deferred basis. A plan of insurance for life, with premiums payable for a person's entire life.

Posted: Fri Jan 02, 2009 05:34 am Post Subject:

Would term be taken out by like a finance company for insurance on a loan? What is an example of when someone would use term vs whole life insurance?

Posted: Fri Jan 02, 2009 05:45 am Post Subject:


Well if you have a 30 yr mortgage, you might buy a 30 yr term policy instead of a whole life policy.

Let's say you have a new born child, and you are only concerned with protecting he/she for the next 30 yrs, you might buy term instead of whole life.

If you just can't afford to buy a whole life policy, you might buy a term policy.

Maybe you can afford whole life, but you would rather buy term and invest the difference.

Posted: Fri Jan 02, 2009 09:07 am Post Subject:

If you just can't afford to buy a whole life policy, you might buy a term policy.

This is perhaps the most common reason why people buy a term life policy. It surely would not have that cash value security associated with a WL policy but it would certainly provide you with all the coverage benefits that would come with a WL policy.

Again, if you're paying to cover a person for a fixed period of time term life could be a better option!

Posted: Tue Jan 13, 2009 05:01 pm Post Subject:

Term life has no cash values. It is call term insurance because it expires on a certain period of time. If you would say whole life insurance, then you can have cash values on it. Whole life plans does not provide protection for a fixed period of time. You can have lifetime protection with whole life insurance. But remember that term insurance is much cheaper compared to whole life insurance.

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