Whole Life Insurance is coverage that lasts throughout the entire life of the insured person, providing cash to the beneficiaries when the insured dies. Whole Life Insurance usually includes an investment piece that is known as the policy’s cash value. This cash grows slowly over the life of the policy. The insured can borrow against the policy if there is enough accumulated value. The insured can surrender (receive cash) for the policy if they choose to stop the coverage. Whole life is more expensive than Term Life Insurance.
Term Life Insurance lasts for a specific amount of time and ends with no cash value at the expiration of the term. The insured decides what term (length of time) they would like for the policy to exist. Generally, Term Life Insurance is designed to last for the time the insured may or might incur debt, like the length of time there would be a house payment or mortgage obligation. It would provide the beneficiary with the funds to cover the debt if anything happened to the insured while it was in force. If the preset term expires, there is no cash value. Premiums on Term Life Insurance are much less expensive than Whole Life Insurance.