How is term life insurance different than whole life insurance?
The get a sense of how whole life and term life insurance policies differ, let's look at a few key features commonly seen in each kind of policy.
Term Life Insurance
- As the name implies, it is life insurance that is effective for a fixed period of time (for example, 5 years, 10 years, 15 years).
- Because it is limited to a fixed period, term life insurance is the most affordable life insurance policy and the easiest to buy.
- Typically, acquiring the policy involves less scrutiny of the applicant's medical status, occupation, age, and other factors than there is when applying for a whole life insurance policy (find out What Influences Life Insurance Premiums).
- A term life insurance policy usually will only pay for death benefits. There is no cash value or equity build-up aspect to it.
- Often, you can convert your term life insurance policy to a whole life policy.
Whole Life Insurance
- As the name implies, this is a life insurance policy that covers you for life.
- Since they cover you indefinitely, these policies are more expensive than term life insurance policies.
- The health examination is usually more thorough than those required for a term life policy. The underwriter will judge and rate any medical issues more harshly.
- A whole life insurance policy will come with a "cash value accumulation" aspect to it that builds up over the life of the policy and can be tapped into (via a withdrawal or borrowing) even before the policy holder passes away (learn more about Insurance as an Investment).
The biggest problem I see with the term policy is what to do upon renewal. If you cannot, or do not use the conversion option on your policy, then you might be denied a renewal of your life insurance (for example, if you have developed a serious health condition).
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Written by Jacques Wong

Jacques grew up around the insurance industry and began actively participating in 2013. Since then, he has gotten a Level 2 license, won Insurance Council of BC awards in 2015 and 2020 for academic excellence in the insurance licensing courses. He educates insurance professionals through PNC Learning and as a Thought Leader at ReFrame Insurance.
In his day job as an insurance broker, he helps businesses with creative risk management solutions and strategic advice when it comes to insurance.
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