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Choosing the right life insurance policy is important. Understanding the difference between term and whole life insurance is a valuable part of the decision. At Aflac, we offer a variety of life insurance plans to help meet your specific needs.
According to LIMRA, 52% of Americans reported owning some type of life insurance in January 2023. This included individual life insurance, employer-sponsored coverage, etc.1 Picking the right life insurance policy can greatly impact your retirement plan and your family’s financial security.
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When deciding between term or whole life insurance, there are crucial differences to take note of. Like it sounds, term life insurance provides coverage for a set term or specific amount of time. They usually vary between 10 and 30 years long. If the policyholder passes away during that specified period, your beneficiary will receive the payout.
The cost of whole life insurance vs. term varies, but term life insurance usually costs less. It costs less because there is only a payout if the timing aligns. We hope that you outlive your term, but if not, the payout can help provide support for your loved ones.
You are also able to choose your term based on your unique situation, possibly reducing costs in the long run. This choice is popular for young families because of the lower premiums upfront. It can also be a good choice for seniors factoring in their long-term plans.
When wondering, “should I buy term life insurance or whole life?” there are a few key takeaways. Whole life insurance provides coverage for your entire life cycle. Typically, whole life insurance costs more because it serves as an investment. This investment, otherwise known as the cash value, is able to grow throughout your lifetime tax-free.
When deciding between term or whole life insurance, you should note the following about whole life insurance. The premiums will not change throughout the course of your life and the death benefit is certain. You do not need to choose a term length. Lastly, the cash value will grow in a tax-deferred account at a secured rate. This is a popular choice for those looking to maximize their financial potential.
There are a few crucial differences in term and whole life insurance. We want to make it easy for you by breaking those differences down into pros and cons.
Choosing between whole life and term life insurance depends on your financial goals. We encourage you to determine what kind of financial security you’d like in place throughout your lifetime. This will allow you to assess the costs and the long-term value of term and whole life insurance accurately.
One of the main differences between whole and term life insurance is the cost. The costs of either plan vary depending on age group, gender, and medical history. Even so, whole life insurance tends to have higher premiums than term life insurance. The premiums are higher because the payments are put into an account that accumulates over time. This can provide you more security when the time comes.
Term life insurance usually has lower premiums. If you choose a 30-year term at a lower rate and your timeline is correct, your family can still receive ample security and possibly avoid higher premiums.
By now, you’ve read our analysis of whole life versus term life insurance. One isn’t necessarily better than the other, but one can be more suited for your unique needs.
We encourage to take a closer look at the costs and decide how much you are willing to spend on a policy. Considering your dependents and who you aim to support is also a key component. Lastly, you should make sure that there isn’t a better option out there for your investment purposes.
Your permanent life insurance options don’t end here. There are additional alternatives outside of whole and term life insurance.
Universal Life insurance is a great option if you want part of your policy to function as a savings account. Variable Life insurance uses sub-accounts that function similarly to mutual funds. Lastly, Indexed Universal Life Insurance allows you to adjust your premiums to maximize your cash policy’s cash value.
These options are generally only suited for specific financial goals. Most people choose between a term or whole life insurance policy. Aflac can work with you to recommend a plan that best meets your needs.
Don’t wait until it’s too late. Help cover yourself and your family with coverage from Aflac.
Get StartedIf term and whole life insurance aren’t for you, here are some alternative policies to consider:
When deciding whether to get term of whole life insurance, it’s important to consider several factors:
Ultimately, the type of policy you choose should depend on your individual needs and financial circumstances. Consider discussing all your options with a qualified professional who can help you find the right kind of policy for you.
Get Started
Looking into getting a term life insurance policy? Find out what term life insurance is and its features, rates, and benefits.
Looking into getting a whole life insurance plan? Find out how whole life insurance works and the benefits, costs, pros, and cons.
Looking into getting a term life insurance policy? Find out what term life insurance is and its features, rates, and benefits.
Looking into getting a whole life insurance plan? Find out how whole life insurance works and the benefits, costs, pros, and cons.
1 LIMRA. Facts About Life 2023. Accessed February 15, 2024. https://www.limra.com/siteassets/newsroom/liam/2023/0859-2023-liam-fact-sheet-2023_final.pdf.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. 65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series/Whole: In Arkansas & Delaware, Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Not available in Virginia. Q60000 series/Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. Not available in Virginia.
Final Expense insurance coverage is underwritten by Tier One Insurance Company. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).
In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22.
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations, and exclusions.
Aflac WWHQ | Tier One Insurance | 1932 Wynnton Road | Columbus, GA 31999
Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
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