Term vs Whole Life Insurance:
The Eternal Battle

term vs whole life insurance

Term vs whole life insurance discussions get pretty heated. Believe me, I know. Whenever I discuss the two financial products with people, they get pretty animated.

However, when people hear the words term life insurance, they think cheap. When they hear the words whole life insurance, they think expensive. Yet, few seldom do research to truly understand what is term life insurance and what is whole life insurance.

Here, we are going to put these two products head to head so you, the reader, can make a better, educated decision on what type of policy is right for you.

Key Differences


Term life insurance protects you for a defined period of time. Hence, the name term. These policies can be used to meet short-term goals.

My wife and I have purchased convertible term life insurance policies in the past to lock in the rates and allow us time to adjust our finances for whole life insurance premiums.

Whole life insurance protects you for your entire life. This product is also referred to as permanent life insurance and cash value life insurance.

As long as the premiums are paid, the policy will stay in force. The cost of premiums are locked, guaranteed, and will never change regardless of time, age, and health.


When you compare term vs whole life insurance, consider the benefits. With term, the only benefit is the death benefit. It may be more accurate to define term life insurance as death insurance.

And can you really call this a benefit? You have to die in order for the benefit to be realized.

There are many advantages of whole life insurance like:

Whole life insurance has three components: death benefit, interest earning feature, and cash value. The cash value that builds up within the policy acts as a savings account.

You, as the owner, have primary access to the cash value in the form of a withdrawal or policy loan. With a policy loan, you never have to qualify or pay the loan back.

Once you explore the living benefits of whole life insurance, you will see how you can utilize these features in your living years.


Of course, cost is typically the deciding factor with life insurance. Cost is very important to understand when comparing term vs whole life insurance.

Which type of policy is the least expensive?
Usually people will say: term life insurance. It is true that term life insurance premiums are cheap, often 1/10 the premiums of whole life. But, that is only in the beginning while you are young and healthy.

As you age and your health declines, premiums increase. Insurance companies are well aware that the mortality rate increase as age increases.

On the other hand, premiums on a whole life policy will never increase regardless of time, age, and health. As a bonus in the later years, if you own a whole life insurance policy, premiums get cheaper because you are paying with inflated dollars.

With whole life policies, you have the capability to recapture the cost of premiums because of the cash value that builds up within the policy.

Only 1% of all of term life policies ever pay a claim.

Term policies rarely pay a claim. This means that all the money paid to premiums will be lost and thus, incur lost opportunity cost.

What does this mean? This means that the premiums you make on a term life insurance contract will rarely be recaptured and those dollars are lost forever.

Since premiums increase over time, you don't recapture the cost of premiums, and there is a lost opportunity cost, I believe it is accurate to say that term life insurance is expensive.

Popularity Contest

Unfortunately, term life insurance has been highly promoted by popular financial experts like Suze Orman and Dave Ramsey. If you have read enough through our website, you will soon find out that I am not particularly a big fan of the majority of what they teach.

Suze and Dave not only promote term life insurance, they despise whole life insurance. When they think about term vs whole life insurance, they only factor in cost. But do you know...

Which policies banks use to invest their money?
Which policies Wal-Mart uses on their valued employees?
Which policies Robert Kiyosaki, Donald Trump, and Warren Buffet use?

**Whole Life Insurance**

Banks, major corporations, and the wealthy invest their money in whole life insurance policies.

So why is there is there a difference of a opinion with Suze and Dave when doing their life insurance comparisons? It's because the banks, major corporations, and the wealthy understand how to truly utilize this tool as a productive resource.

I say, do your homework and then come to your conclusion.

Whole life insurance is the foundation of our financial structure. We do not sell life insurance. That should spark your interest to find out why, and how, we utilize this tool.

How do you decide?

Term vs whole life insurance is a debate that will continue like Coke vs Pepsi. Unfortunately, I believe that people base this decision without proper the knowledge and education on these two financial products.

Decide on what you want your life insurance to do. Do you want it to just provide a death benefit? Or, do you want it to provide a pathway to wealth today, tomorrow, and for future generations.

I have heard people say:

People don't buy life insurance. Life insurance is sold to them.

This is a very passive statement. Be smart and understand term vs whole life insurance. Our advice: If you are still unsure about which type of policy to get, get convertible term polices. Continue your research and use this website as a resource to learn what is term life insurance, what is whole life insurance, and the pros and cons of each.

Once you can fully grasp the benefits of whole life insurance, convert your polices. Mimic what the banks and the rich do with their whole life insurance policies.

With some education, you can go from a product you do not understand to a product you can utilize.

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