Whole Life vs. Term Life Cost

Written by Advanced Mutual Group

burial insuranceWhen you become an adult, your days are made up of paying bills, schedule appointments, and maintain a work-life balance. While you become so busy with the daily matters of life that in the middle of keeping up with the day-to-day happenings, it can be easy to forget about your future.

When you are nearing your retirement, you actually start thinking about life insurance. The main reason to think about it is that you hit that certain age. Though, the funny thing about life is that you cannot control it. Things happen that we don’t see coming, and there is very little that we can plan for.

That is why it gets so important to have a piece of mind with a life insurance plan. It doesn’t matter whether you are young and right out of college or knocking on the retirement door. You need life insurance and the best time to plan and get it is now.

There seems to be an ongoing battle regarding the whole life insurance and term life insurance cost. Either you are 30 years old, or even if you are 50 and need life insurance, you start thinking about what the best is for you, whether it’s whole life or term life?

The answer is not that simple; however, there is one thing certain that when you get older, life insurance becomes quite important for you. It is one of the most important purchases you make in terms of financial security regarding your family.

Finding the right life insurance company and then the policy can be a long and confusing process. Countless insurance companies are present in the market with dozens of policies and coverage amounts. It is up to you to do research and then decide which one to buy.

life insurance and its importance

Even before deciding about the best plan that is available for you, it is important you be aware of the need for life insurance and the disadvantage if you don’t have a policy. The main reason for life insurance is to replace the salary of a loved one and provide for the family that relies on that salary.

You would never want to leave your family to be burdened with thousands of dollars of debt during this difficult period of time. life insurance gives you peace of mind when you know that your family will be taken care of if something was to happen to you at any time.

It is better not to wait until the loss of a loved one and start thinking seriously about life insurance and then shopping for your plan. You must keep in mind that it is never too early to get started. You need to determine your needs and what you want the insurance to do.

Whole life insurance

Whole life insurance is sometimes known as permanent insurance. This insurance policy provides coverage for your entire life as long as you keep paying the premiums. The whole life insurance can accumulate cash value, which builds up in your policy as your premiums are paid.

It surely does depend on the insurance provider; you can have the advantage of withdrawing your policy cash value in the form of a policy loan or apply it towards the policy premium. The death benefit will automatically subtract any unpaid policy loans.

A whole life insurance policy pays the death benefits to the main beneficiary at the time of the policyholder’s death. A whole life policy provides lifetime coverage, unlike term life insurance. As long as the premiums are paid by you, your policy stays there until you pass away.

Another advantage of the whole life insurance is that the premium is basically locked in for the life of the policy. This feature is has a lot of importance as normally the life insurance costs more as you get older and can get harder to qualify for. Locking yourself in an affordable premium at an early age can make a difference in affording life insurance as you get older.

It depends on the provider; most of the whole life insurance policies don’t require a medical exam to qualify. There are a few health questions that you have to answer. This certainly makes it easier for you to qualify, especially if you have any type of health issue.

Pros and cons of whole life insurance


The whole life insurance has many potential benefits that could make it a strong part of your financial planning.burial insurance

  • It will pay a benefit

One of the major benefits of a whole life insurance policy is that as long as you stay current on your policy and keep paying your premiums, someday your policy will pay a death benefit. Unlike the term insurance policy that actually ends at a certain point in time, a whole life insurance policy pays a death benefit regardless of when you die.

  • The premiums are predictable

Unlike different types of life insurance, the premium amount that you pay will remain the same as long as you hold your policy, regardless of age or any health challenges. With some policies, eventually, you will be done paying your premiums, but your life insurance will continue.

The whole life insurance builds cash value over the period of time as you regularly pay your premiums. Depending on the policy, this cash value could grow to a substantial amount in the coming future. Once you have this amount, it won’t decline with the market, while you can use this cash value throughout your life. It could become a major part of your retirement plan and can also help you weather bad markets.

  • It may pay dividends

The whole life insurance cash value is guaranteed to grow at a certain rate based on the assumptions that the life insurance companies make. If the insurance company you bought your policy from performs better than actually anticipated, it may pay a dividend to its policyholders. With this money, you can pay your premiums, reinvest in your policy, or you can also take this dividend as cash.

  • Tax advantages

There are several tax benefits with whole life insurance. First of all, the death benefit is normally tax-free. Other than that, the growth of the cash value is tax-deferred. It means that you don’t have to pay taxes on the money or the dividends that you earn while the policy is in place.

You have to keep in mind that you would owe tax on your earnings if you ever happen to surrender on your policy. The tax-deferred growth can actually allow your cash value to grow even at a faster rate.


Though the whole life insurance benefits are quite attractive, there are also some disadvantages that you should consider before committing to the whole life insurance policy.

  • Whole life is more expensive than term life

Because the whole life builds cash value and won’t expire, its policy is more expensive than term life insurance with a comparable death benefit. Because of this reason, people buy a mix of term life and whole life to get a large benefit. This way, they also take advantage of the additional benefits of the whole life insurance policy.

  • It is more complex

It is quite easy to understand term life insurance as you pay a certain amount every month for a certain death benefit. There is more to consider with whole life insurance. While it depends on the policy, there could be different rates of guaranteed cash value growth. It varies from company to company how the dividends are paid out, and this could be confusing sometimes.

Such complexity can give you an advantage also, but you can tailor a whole life policy to suit your specific requirements. That is why it is very necessary to work with a financial professional or a company that you trust.

Term life insurance

The term life insurance covers you for a fixed span of time. It is generally considered temporary insurance as it can last as little as one year. Depending on your insurance provider, you can scale it from there. Though the average span of term life insurance is between 10 to 20 years, it can also cover somebody until they reach a certain age.

The term life policies generally pay the death benefit if you happen to pass during the policy term. If the policy happens to expire before you pass, the insurance company will not pay the death benefit. It means that when you buy a term life policy, you are only covered for the time that you pay the premiums.

Some term insurance policies are more flexible i.e.

  • Renewable term

A renewable term policy allows you to renew for a certain period of time when the policy expires.

  • Convertible term

With the convertible term policy, you can convert your insurance to a different plan.

In order to qualify for the term life insurance, you may require a medical exam. The reason for medical exams is because the coverage amounts are high. As term life insurance doesn’t accumulate cash value and is quite straightforward, its premiums are relatively low as compared to whole life insurance.

The reason for finding lower premiums is that the term life coverage is only for a specific period of time. There are several factors that the term life insurance depends on like they will vary depending on either you are a smoker or non-smoker, your age, and either you have any pre-existing conditions or not.

Pros and cons of term life insurance


  • Cost-effectiveness

There is no doubt that the term life insurance plan is the most cost-effective life insurance product. The insured can avail of huge life coverage at a cheaper premium, which makes it one of the most affordable options for everyone. The term life insurance premium rate is almost six times lesser than the premium rate of other insurance policies.

  • Simplicity

The term life insurance policies are easier and simple as compared to the other policies. Various other life insurance plans are a combination of risk cover with savings. However, the term plan is simple; you pay the premium amount and get life coverage for the opted policy term.

  • Flexibleburial insurance for seniors

The term insurance policies offer huge flexibility. The insured can renew their term insurance policy without any medical exam. Also, the insured can be able to convert their term insurance policy into an endowment policy for existing sum assured with an increased premium amount.

  • Tax benefit

All of the term life insurance policies that are offered by various life insurance companies offer a tax benefit to the policyholder. Even though the premium amount of the term insurance policies is less, it is still eligible for the tax benefits.


  • No investment return

The term policy is designed in a way that the insured pays a particular premium only for life coverage, and the policy is not designed to build cash value. The premiums paid by the insured are collected to pay a death benefit to the beneficiary. So in case, the policyholder outlives the policy term, he/she will not be able to receive the death benefit.

  • You cannot achieve wealth creation goals

With term life insurance, wealth creation goals cannot be achieved. Similarly, they cannot be offering a hedge against inflation as they are no profit plans. In addition to that, the term insurance policy doesn’t offer a surrender value or loan facility.

Comparing whole life and term life costs

Now that you got a better picture of the difference between whole life and the term life policies, you would probably be comparing the whole life and term life costs. The short and long-term costs of the whole life policy and term life policy are based on factors like age, the face value of the policy that you intend to buy, and whether you are a smoker.

You may find that the costs of the whole life insurance seem daunting as compared to the term life insurance. The reason is that the dollars you pay into the term life insurance premiums are only to provide the death benefit to your beneficiaries if you happen to die during the specified term. Compare us to Colonial Penn and Glob life insurance.  We have Mutual of Omaha burial insurance with no waiting periods.

The money you invest in the whole life insurance premiums builds cash value that can be used later in life and will add to the death benefit payout. Your cost percentage that goes into your cash accrual account increases with time as many administrative costs for setting up policy occur early in the life of the policy.  Hi, I’m Mitch Winstead.  I have been helping people for over 20 years with burial insurance.  We have top-rated carriers with the best prices.  All of our policies are state-regulated.  If you have any questions or would like a quote with no obligations, call our office today at 8666-598-8170 or email us at mitch@allstarseniorbenefits.com

Our website is http://www.advancedmutualgroup.com

Our Facebook page is http://www.facebook.com/advancedmutualgroup

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Mitch Winstead Licensed Broker

About Advanced Mutual Group
About Advanced Mutual Group

We shop the life insurance market and do all the hard work for individuals across the nation to secure the best life insurance rates.

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