Bottom line
- Term life covers a set number of years at a low, fixed price. Whole life covers your entire life and builds cash value.
- For the same $500,000 at age 40, a healthy man pays about $44 a month for term and about $537 for whole life.
- Term fits temporary needs such as a mortgage or raising kids. Whole life fits lifelong needs such as final expenses or leaving an inheritance.
- Many term policies let you convert to permanent coverage later without a new medical exam.
In this article
The numbers side by side
- $500k 20-year term at 40: about $37 (women) and $44 (men) a month
- $500k whole life at 40: about $482 (women) and $537 (men) a month
- Whole life generally costs 3 to 14 times more than term for the same benefit
Average rates for healthy nonsmokers from MoneyGeek.
The term vs whole life insurance debate usually gets framed as cheap versus expensive. A better question is how long you actually need the money to be there.
If the answer is until the kids are grown or the house is paid off, term usually wins. If the answer is whenever I die, whole life starts to make more sense.
Term vs whole life insurance at a glance
Term life
- Covers 10, 15, 20 or 30 years
- Lowest cost per dollar of coverage
- Premium stays level for the term
- No cash value; pays only if you die during the term
Whole life
- Covers your whole life
- Premiums are many times higher
- Premium usually fixed for life
- Builds cash value you can borrow against
What the price gap looks like
That difference is the heart of the old advice to buy term and invest the rest. It works if you actually invest the savings every month. If you know you will not, the forced savings inside whole life can be worth something to you.
Price both options before you choose
SponsoredWhen term life is the better fit
Term probably fits if you:
For more detail, see our term life insurance guide.
When whole life can make sense
- β You want money guaranteed for funeral costs or estate taxes no matter when you die.
- β You support someone who will need help for life, such as an adult child with a disability.
- β You have already maxed out other tax-advantaged savings and want another place for cash.
- β You value fixed premiums and a guaranteed cash value schedule over higher potential returns elsewhere.
If the goal is only to cover a funeral, a small final expense policy is a type of whole life with a lower face amount. See our final expense insurance guide.
One way a family might split it
Maya, 34, two kids and a new mortgage
Maya needs about $750,000 of coverage until her youngest finishes college. A whole life policy that size would strain her budget.
She buys a 25-year term policy for most of the need, plus a small whole life policy to cover funeral costs whenever they come. Her total premium stays affordable and both needs are met.
Illustrative example. Names and numbers are made up to show how it works.
Compare term and whole life quotes nearby
Add your ZIP code to see term, whole life and final expense options offered where you live. You can look without committing to anything.
Can you switch from term to whole life later?
Often, yes. Many term policies include a conversion option that lets you change some or all of the coverage into a permanent policy before a set age or date, without a new medical exam. The new premium is based on your age at conversion, so it will be higher. Check the conversion deadline in your policy before you need it.
Frequently asked questions
Is term or whole life insurance better?
Neither is better for everyone. Term gives the most coverage for the least money during the years people depend on your income. Whole life gives permanent coverage and cash value at a much higher price.
What happens when term life insurance ends?
Coverage stops and no benefit is paid. Many policies let you renew yearly at much higher rates or convert to permanent coverage before a deadline.
Can I cash out whole life insurance?
You can borrow against the cash value or surrender the policy for its cash surrender value. Unpaid loans reduce the death benefit, and surrendering ends the coverage.
Why is whole life so expensive?
The insurer will almost certainly pay a claim someday, and part of each premium funds the policy cash value.
See life and final expense options for you
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