Should you get whole life or term life insurance? Generally, and virtually always, term life is a much much better idea. Whole life can be used by the wealthy as a way of estate planning or other planning, but in the pure sense of life insurance and its intended use, term life is a better idea.
The difference is that term life has a fixed period of time while whole life continues your entire life. If you choose term life, for say 20 years, then you will pay the premiums for 20 years and after that the policy expires. If you pass away during the term, your beneficiary would receive the payment. You do not have the option to continue the policy after the 20 years. Whole life, on the other hand, can go on as long as you want it at a fixed premium.
To understand why term insurance is generally a better idea and truer to the purpose of life insurance, one has to know the purpose of life insurance. It is to protect one’s family financially int eh event of the passing of the wage earner. The idea is that after 20 or 30 years, one’s family should be on their own and able to support themselves. Your children should be adult and no longer dependent. Your mortgage should be paid off and you should have other savings. The money from the life insurance should not be needed.
Whole life, on the other hand, pays off whenever the insured passes away, assuming the premiums are still being paid, and you should NEVER stop paying premiums on a policy as the value increases exponentially the closer one is to passing. If you no longer wish to pay the premiums, please look to sell it via a life settlement or other method. Do not just let it expire. But I digress. Once one’s children are grown, mortgage is paid and savings are accumulated, life insurance is no longer needed.
Agents will tell you that whole life accrues value, but that value is YOUR money. You paid it from your premiums. You can invest it any way you want.
The difference in premiums is not unsubstantial. For a $250,000 policy, for example, of a healthy male around 40 years old, for 20 year term life might be $300-400 per year, while for whole life, the premiums may be $3000-4000 per year. A 10 times difference.
So, unless your needs re other than the true, intended purpose of life insurance, you should highly consider a term policy over whole life. It will most likely fit your needs much better.