Term vs. Whole Life: Which Is Right for You?

Life insurance gets oversold and overcomplicated. Strip away the jargon and almost every decision comes down to a simple question: do you need coverage for a season of life, or for your whole life?

Term life, in one breath

You buy coverage for a set period — commonly 10, 20, or 30 years — and pay a level premium. If you pass during the term, your family receives the benefit. If you outlive it, the policy simply ends. It is inexpensive because most terms expire unused.

Whole life, in one breath

Coverage lasts your entire life and builds a cash value you can borrow against. Premiums are far higher because part of every payment funds that cash value and the guarantee of lifelong coverage.

A useful rule of thumb

Most families are well served by buying enough term insurance to cover the years their dependents rely on them, and investing the difference elsewhere.

When whole life can make sense

• You have a lifelong dependent who will always need support
• You have maxed other tax-advantaged accounts and want more
• You have specific estate-planning goals

How much coverage?

A common starting point is roughly 10 times your income, adjusted for debts, the mortgage, and future costs like college. Get a few quotes — pricing for identical coverage varies more than people expect.