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

Term life insurance and whole life insurance are two distinct types of life insurance policies that serve different purposes and come with varied features. Term life insurance is designed to provide coverage for a specific period, typically ranging from ten to thirty years. It is often considered a more affordable option since the premiums are generally lower compared to whole life insurance. This type of policy pays a death benefit to the beneficiaries if the insured individual passes away during the term. However, once the term expires, coverage ends, and there is no cash value accrued. This type of insurance is ideal for individuals who require coverage for a particular duration, such as until their children are grown or their mortgage is paid off. On the other hand, whole life insurance offers lifelong coverage and includes a savings component known as cash value. The premiums for whole life insurance are higher compared to term life due to the lifelong coverage and the accumulation of cash value. The cash value grows over time at a guaranteed rate, and policyholders can borrow against it or withdraw funds if needed. Whole life insurance can be considered a long-term financial product, providing not only a death benefit but also a means to build savings over time. Ultimately, the choice between term life insurance and whole life insurance depends on an individual's financial objectives, coverage needs, and budget. Some individuals prefer the lower premiums and simplicity of term life insurance, especially if they need coverage for a finite period. Others may choose whole life insurance for its cash value benefits and lifelong coverage. It is advisable for potential policyholders to weigh these factors carefully to find the best option for their personal circumstances. For more information on specific options, individuals may wish to refer to the current LSM Insurance web page.