Whole Life vs Term Life: What's the Difference? Which Should I Choose?

Life insurance is not everyone's favorite topic of conversation. And as a result, people often don't have the necessary information to make informed decisions about life insurance. This means that when it comes time to choose a plan, people are left confused and in a difficult position. 

New call-to-actionBut it doesn't have to be this way. This important topic can be easy to understand so long as you know a few of the basics. One of these is the difference between whole life insurance and term life insurance.

Let's take a look at how each kind of plan is different, as well as the benefits and drawbacks of each one. By understanding this concept, we'll be able to help you decide which type of plan is right for you.


What Is Whole Life Insurance?

Whole life insurance provides a death benefit throughout the policyholder's lifetime. There is a cash value component that accrues value over time. The policyholder may then borrow or withdraw from these funds. So long as the policyholder continues to make payments, then the insurance never expires.

The Benefits 

While whole life insurance initially has more expensive insurance premiums than term life insurance, over the life of the insurance policy you can potentially save money. These savings can also be compounded by tax breaks. Whole life insurance is often an excellent choice for estate planning. Finally, it covers you for life. 

The Drawbacks 

Especially initially, whole life insurance has higher costs. You also have a lack of investment control with whole life insurance. Another important consideration is that it provides a smaller death benefit. 

Overview of pros and cons for whole life insurance


  • Can save money over time.
  • Provides tax breaks.
  • Good for estate planning.
  • Provides lifetime coverage.


  • High cost, especially initially.
  • Lack of investment control.
  • Smaller death benefit.


What Is Term Life Insurance?

Term life insurance is the most basic form of life insurance, and is perhaps what you first imagine when thinking of life insurance. It is for providing affordable death protection in the short term. It only pays a benefit in the instance of the policyholder dying.  

The Benefits 

Term life insurance offers the most competitive price, providing the cheapest form of life insurance. It is also a straightforward type of insurance making it easy to understand. A term life insurance plan can be quite flexible. They are also an excellent temporary solution.

The Drawbacks 

The major drawback with term life insurance is that it is not designed to be used long-term, and is not beneficial to use over a lifetime. There is no cash value to a term life insurance policy. Increasing prices over time contribute to this being cost prohibitive as a long-term life insurance choice. 

overview of pros and cons of term life insurance 


  • Lowest pricing in the short term.
  • Straightforward.
  • Flexible.
  • Perfect for temporary situations.


  • Not for lifetime use.
  • No cash value.
  • Increasing prices over time.
  • Cost Prohibitive long term.

Which Insurance Plan Is Right for You?

This is going to depend on your needs. Whole life insurance provides a long-term plan that could give you the peace of mind of having found a lifetime solution while offering the flexibility of an accruing cash value. Meanwhile, term life insurance is ideal for someone who is currently in the market for something short-term and affordable. 

If you still have questions about whole life and term life insurance plans we are here to help. An Arnold Insurance Executive is here to work for you to find the insurance plan that is perfectly tailored to your needs.


Originally posted 12/29/20 - Updated 3/15/23

Back to Blog