Why would a person choose term life insurance over whole life insurance?
Asked by: Elroy Rogahn | Last update: August 12, 2025Score: 4.8/5 (17 votes)
Why might term insurance be a better option than whole life insurance?
If you only need life insurance for a relatively short period of time (such as while you have minor children to raise), term life may be better because the premiums are more affordable. If you need permanent coverage that lasts your entire life, whole life is likely preferred.
Why do many experts recommend term life insurance over whole life insurance?
Since it's generally more affordable than most permanent life insurance, term policies can be a good fit for those who have a limited budget but need coverage. Additionally, term life insurance can have some flexibility.
Why would someone select a term life policy over a permanent one?
They both have their pros & cons. Term is cheaper because it's low risk. Most term policies do not pay out. Ideally, you will outlive your term policy. When the term ends, & you get another policy, it will cost more, because the rate is dependent on your age & health. You also risk being uninsurable in the future.
What is the downside of whole life insurance?
A more complex product than term life insurance. Higher premiums than term life insurance. Could be costly if coverage lapses early.
Whole Life Insurance vs Term Life Insurance
Is it better to have whole life or term life insurance?
Term life is more affordable but lasts only for a set period of time. On the other hand, whole life insurance tends to have higher premiums but never expires. Knowing the differences between term and whole life insurance will help you choose a policy that works best for you and your lifestyle.
What are the disadvantages of term life insurance?
Ans: Term insurance disadvantages include no investment opportunities, lack of assistance while alive, no survival benefit if the policyholder outlives the term, and no cash value accumulation.
Can you cash out a term life insurance policy?
While you can't cash out term life insurance, you can sell your policy. Additionally, you may have other options if you want to change your coverage, such as lowering your premium payments or converting to a permanent policy.
Why would you be denied term life insurance?
They can include engaging in risky hobbies and behaviors like skydiving; having a history of DUIs or speeding tickets; having a dangerous job like roofing; having a criminal record or a less than ideal financial history; being a smoker; and failing a drug test.
What happens if you outlive your term life insurance?
No, with a standard term life insurance policy, you won't be receive anything back if you outlive your life insurance. So, what happens at the end of your term life insurance? Your life insurance will simply expire and you can either take out a new policy or look into other types of financial protection.
What happens to term life insurance at the end of the term?
If you outlive your term (let's hope this is the case), then typically one of two things happens: The policy will simply end, and you'll no longer owe payments or be covered, or. The insurer might allow you to keep your coverage by converting all or a portion of the policy into permanent life insurance.
At what point is life insurance not worth it?
When is term life insurance not worth it? Term life insurance probably isn't worth the costs if you don't have any significant debts to pass on to your loved ones or you don't have dependents or a spouse that you'd leave in a bind by passing away.
Can you borrow against term life insurance?
Life insurance loans are only available on permanent life insurance policies — such as whole life and universal life — that have a cash value component. You likely can't borrow against a term life insurance policy since it probably doesn't have cash value. Learn more about term vs. whole life insurance.
What is the biggest advantage of term life insurance?
Term Life Insurance Pros: It's customizable, specific to your timeline, and usually costs less than whole life insurance. Term Life insurance Cons: If you outlive the term length, your coverage will end and you won't receive any benefits.
What is the main advantage of term insurance?
Term life insurance is a simple, affordable solution for your life insurance needs. It can also be used to supplement your other insurance coverage. Coverage is available for 10- or 20-year terms, is less expensive and more flexible than whole life insurance and can easily be renewed.
What is term insurance best for?
What does term life insurance cover? If you pass away, your beneficiaries will receive a payout to take care of the expenses of their choice. Term life insurance payouts are commonly used to cover funeral costs, childcare, payoff debt, college tuition or everyday expenses should something happen to you.
At what age should you not get term life insurance?
At What Age Is Life Insurance No Longer Needed? Life insurance is no longer needed for many people once they reach their 60s or 70s. At this point they have retired, their kids have grown up, and they've paid off their mortgage and other debts.
What will disqualify you from term life insurance?
Due to the added risk health problems create for insurers, some pre-existing conditions can raise your premium or even disqualify you entirely from certain types of life insurance. A few common examples of pre-existing conditions include high blood pressure, diabetes, cancer, and asthma.
Do you need an exam for term life insurance?
Yes, some insurers offer life insurance policies without a medical exam, usually called guaranteed issue or simplified issue policies.
Do you get money back if you cancel whole life insurance?
If you decide to cancel whole life insurance or another permanent life product, you could receive a payout based on the cash surrender value. Surrender charges: Be mindful that surrendering your policy, particularly in the early years, often incurs surrender charges. These fees will reduce the amount you receive.
Can term life be converted to whole life?
You may still have outstanding debt as you near your term life policy's expiration date that life insurance could help pay off when you pass away. By converting from term life to whole life, you can maintain your coverage for the entirety of your life and protect your family financially.
Who buys term life insurance?
Life settlement companies and third-party investors buy term life policies from policyholders. As a policyholder, you can sell your insurance directly to a buyer, called a life settlement provider. You can also use a life settlement broker or you can work with a full-service life settlement company.
Do you get money back if you outlive term life insurance?
Can you get your money back after your term life policy expires? Once your policy ends, you can't get back the premiums you paid unless you have a return of premium rider. This optional add-on lets you receive a refund of premiums if you outlive your policy term.
What is the age limit for term insurance?
There are both minimum and maximum age requirements that potential policyholders must meet. The minimum age limit for term life insurance is 18 years. On the other hand, the upper age limit for obtaining a term insurance plan is set at 65 years. However, the term insurance age limit is not one-size-fits-all.
What voids term life insurance?
Life insurance is a contract between you and the insurance company. Misrepresenting yourself or providing inaccurate information on your insurance application can cause a breach and void the contract, ending with the claim denied.