When you start to consider purchasing life insurance, you will start to hear the terms "whole life" and "term life" as the two different kinds of policies available. When you better understand the difference between the two, then you can decide which is right for you.

Identification

A whole life insurance policy offers death benefits to your beneficiaries and it also offers you a savings account that you can use toward your retirement or any large purchases later in life. A term life insurance policy offers only a death benefit to your beneficiaries and no cash value to you.

Time Frame

A whole life policy is in effect for as long as you pay the premiums. A term life policy has a pre-determined time frame associated with it. If you die after the term policy has expired, your beneficiaries get no death benefits.

Cost

A whole life insurance policy generally has more expensive premiums per month than a term policy due to the investment vehicle attached to the whole life policy.

Considerations

If you are looking to add protection to your loved ones on a large investment such as a mortgage, then a term life policy would be ideal. It would have low premiums, and it can be designed to cover only the term of the mortgage. A whole life policy is more geared toward people looking to save for their own retirement and also make sure that when they die their loved ones are financially secure.

Misconceptions

Even though the term is defined for term life insurance, according to MSN Money, the premiums for term life insurance tend to increase over time while the premiums for whole life generally stay consistent.

Source:

SmartMoney.com: Term of Whole Life?

MSN Money: The Raging Debate of Term Vs. Whole Life

SavingtoInvest.com: Life Insurance - Whole Versus Term

Resource:

Bankrate.com: Life Insurance Calculator