What is the difference between term and whole life insurance?

Term life insurance and whole life insurance are two fundamental types of life insurance products that serve distinct purposes, providing different features and benefits to policyholders. Term life insurance is designed to provide coverage for a specific period, usually ranging from ten to thirty years. During this term, the insured pays regular premiums, and if the policyholder passes away before the term ends, the beneficiaries receive a death benefit. However, if the policyholder outlives the term, the coverage expires, and there is no payout. Term insurance is generally more affordable than whole life insurance due to its temporary nature and the lack of a cash value component. This makes it an appealing option for individuals seeking extensive coverage without the higher premiums associated with permanent policies. On the other hand, whole life insurance offers lifetime coverage as long as the premiums are paid. This type of policy combines a death benefit with a cash value component, which grows over time at a guaranteed interest rate. The cash value can be accessed by the policyholder through loans or withdrawals, providing flexibility for financial needs. Because of these additional features, whole life insurance typically comes with higher premium costs compared to term life insurance. In summary, the primary differences between term and whole life insurance lie in the duration of coverage, cost, and the presence of a cash value component. Term life provides temporary protection at a lower cost, while whole life offers lifelong coverage and the ability to build cash value. Individuals should carefully consider their financial goals and needs when choosing between these two options. Those looking for additional information may want to explore the current web page related to Penn Mutual for specific products and services offered.