The most debated life insurance question — settled.
Both policies pay a tax-free death benefit. That's where the similarity ends. Term is pure, cheap protection that expires. Whole life is a permanent contract that builds guaranteed cash value. One is right for most people. One is right for almost nobody by default — and oversold constantly.
| Term Life | Category | Whole Life |
|---|---|---|
| ✓ $18–$45 | Monthly cost (sample $500K) | $500–$900 |
| 10–30 years | Coverage duration Depends on your need | Lifetime |
| No | Builds cash value Only matters if you need it | Yes — guaranteed |
| Fixed | Death benefit | Fixed (+ dividends) |
| Fixed | Premiums Both are level | Fixed |
| Usually | Medical exam required | ✓ Sometimes |
| Nothing | Cash out if canceled Penalized in early years | ✓ Surrender value |
| ✓ Most efficient | Cost per dollar of coverage | Least efficient |
| No | Estate planning tool For high-net-worth families | ✓ Yes |
Term is 10–20× cheaper per dollar of coverage and provides the same core protection: a tax-free lump sum if you die. Whole life makes sense only in specific estate-planning scenarios — typically when you've maxed every other tax-advantaged account and need a permanent death benefit for wealth transfer. For the vast majority of people with a mortgage, kids, or income to replace, term is the answer.
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