Comparing the Different Types of Life Insurance: Advantages and Disadvantages

The Advantages of Term Life Insurance:

• Term life insurance offers a high level of coverage for the most affordable price.
• Term life policy premiums are fixed for the life of the policy.
• Term life insurance is easy to understand and has a simple enrollment process.
• Policies can be customized with riders to add additional benefits.

The Disadvantages of Term Life Insurance:

• Deciding up front how many years you need to provide protection for your family. Premiums cost more the older you get, so if you need to extend your coverage beyond the term of your existing policy later in life, the insurance premiums will be much higher.
• Policies only last for a fixed term; if you'd like to extend your coverage, you may need to reapply and retake the medical exam.
• As term life policies can be more expensive later in life, whole life may be a better option for people over 50.

The Advantages of Whole Life Insurance:

• Policies build a cash value in addition to the death benefit. The cash value can be used to pay for premiums, borrow money to cover unexpected expenses or help pay for retirement expenses.
• Riders can be added to the policy. Riders allow coverage to be increased without the need for additional medical tests.
• The growing cash value and fixed premiums can make whole-life policies an excellent choice for predictable long-term financial planning goals.

The Disadvantages of Whole Life Insurance:

• Coverage can be expensive, which can make large coverage sums very costly.
• Premiums cost more than term life insurance premiums.
• It costs more to cover needs that will disappear, such as mortgages or family income needs for children. 
• Coverage may cost more during the early years when the need for protection is often greatest.