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Question for the Money Doctors

Question submitted on Oct 24, 2013.

Question

What is the difference between whole life insurance and whole term insurance?

Answer

Whole life insurance is life insurance that is purchased for your "whole life". The premiums are never increased. It also has an investment component together with a death benefit. It builds cash value in the policy and may be surrenderred at any time prior to death and the cash value or investment component is paid to the policy owner. At death however, the policy only pays the death benefit component and none of the investment component or cash value.

Term insurance is life insurance that only has the death benefit component and does not have any investment component therefore, it does not build any cash value. It is typically purchased for a specific time period, such as twenty year term, or ten year term.


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