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

Term Life Insurance

What it is: Coverage for a specific period (10, 20, or 30 years). If you pass away during the term, your beneficiaries receive the death benefit. If the term expires and you're still alive, coverage ends.

Best for: Young families, mortgage protection, income replacement during working years. Most people's insurance needs decrease as they age — kids grow up, mortgages get paid off, retirement savings accumulate.

Cost: A 30-year-old can get $500,000 in 20-year term coverage for $25-35/month.

Whole Life Insurance

What it is: Permanent coverage that lasts your entire life. Part of your premium builds cash value that grows tax-deferred. You can borrow against this cash value or surrender the policy for its accumulated value.

Best for: Estate planning, leaving a guaranteed inheritance, business owners, or high-net-worth individuals who've maxed out other tax-advantaged accounts.

Cost: The same $500,000 in whole life coverage might cost $300-500/month — roughly 10x more than term.

The Practical Answer

For most families in Florida, Texas, and Alabama, term life insurance is the right choice. It provides the coverage you need at a price you can afford. The money you save compared to whole life premiums can be invested elsewhere for potentially better returns.

Consider whole life only if you have specific estate planning needs or if you've already maximized your 401(k), IRA, and other investment vehicles.

A Common Strategy

Many financial advisors recommend "buy term and invest the difference" — get affordable term coverage and put the premium savings into index funds or retirement accounts.