So often I get asked Whole Life vs Term Insurance, which is best? The answer is BOTH. But, you need to learn which is right, in which situation. Let’s break this down for you in an easy to understand way.

The best way to look at whole life insurance or term insurance is this;

“Think of term insurance is like renting an apartment, when whole life insurance is like owning a house”

Term Insurance

Term insurance (like renting) is the most affordable option. And it’s great for people who know they do not want coverage forever. The benefits of term insurance are

1. Cost – Most affordable option of life insurance

2. Coverage – How much protection your loved ones receive if you were to pass away.

3. Term -typically range from 10, 20, 30 years. This means your cost to own and the coverage about will not change for the length of the term.

At some point, if you stop paying and have not filed a claim, you walk away from your policy with nothing to show. Kinda like renting an apartment. All your rent cheques were paid, but you don’t have anything to show for it.

For more information on Term, you can read our article by CLICKING HERE. Or check out our buyers guide HERE.

Whole Life Insurance

Whole life insurance is more like owning a house then renting an apartment. This is a little more expensive but will give you these benefits:

1. Level cost – Cost to own this coverage will stay level forever. Never increase, some plans will allow you to pay for 10-20 years after which you can stop paying and own the policy. This is similar to your mortgage, eventually, you pay off your mortgage and you own it.

2. Level or increasing benefits. Like your property increases in value, so does some life insurance plans. With whole life insurance specifically, your plan will increase at a GUARANTEED rate, without ever decreasing.

3. Cash value – yes these policies can make you some money that you can access while you are alive. This is called a cash surrender value. The cash surrender value increases year over year at a minimum rate. This can be used by you for any reason.

For more information on Whole life insurance CLICK HERE to reach more.

So this often leads to which one for you?

Well, if you are looking to cover something temporarily. Like a mortgage, you hope to pay off one day, a business loan or just coverage until your children are grown and out of the house, term insurance might be your best bet.

If you prefer to have something regardless when you pass away whole life might be a better fit. It’s always best to meet with an advisor and figure out which is best for you.

Our last pro tip is that you can mix and match. Some people will purchase a base of whole life and layer term on top.