Term life or whole life: Which to choose?

Life Lessons

Term life or whole life: Which to choose?

Life is full of choices. This is one you don’t have to make. If your employer or insurance provider offers term and whole life insurance, consider choosing both.

Why? Because the two main forms of life insurance — term and whole — serve different, complementary purposes. If you carry both during your working years, you’ll more fully protect your family from the costs that come at the end of life.

Here’s how:

Term life: For your working years

Term life is insurance you have for only a certain amount of time. People usually buy term life to last through their working years, when their income is paying all sorts of bills for the people they love — like the mortgage on the house, or school expenses for the kids.

Most people have a vision of the future they want for their families. If a breadwinner dies young, term life insurance can help make sure that vision can come true.

But term life coverage typically ends when you retire. At that point, your income is probably not so important to your family. The kids might be grown and supporting themselves. Your house might be paid off. Now you just need enough life insurance to pay your final expenses. That’s where whole life comes in.

Whole life: For your end-of-life costs

Meanwhile, whole life insurance coverage allows you to protect your loved ones from expenses that are incurred or must be paid after your death.

 Most people don’t have enough money saved up to pay for things their families might need after they die. Funerals now cost the typical U.S. family around $8,500. There may also be remaining out-of-pocket medical costs that must be paid following a loved one’s passing. A whole life insurance policy can help pay for some of these costs, so your family doesn’t have to.

Why you should buy whole life during your working years

Whole life is less expensive if you buy it while you’re young. Establishing a foundation of permanent life insurance that can last throughout your lifetime is a key piece of a solid financial plan.

“So buying your whole life coverage while you’re still working can make a lot of sense, even if you already have term life,” said Pam Jenkins, assistant vice president for product development at Colonial Life. “You might also consider purchasing a term life policy for your spouse, and whole life policies for your spouse and your kids — because even if you’re still working, unexpected funeral costs, education costs and living expenses can be burdens your family doesn’t need.”

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