Maximize your HSA e-Newsletter
August 2019
Vol. 15, Issue 8

 What’s the Difference Between Term & Whole Life Insurance?

One of the reasons so many people are intimidated by the mere concept of life insurance is that there are a multitude of coverage options, each with significant structural differences that can be hard for the average person to discern.

Taking a few moments to familiarize yourself with the different options is the first step in securing the kind of protection you and your family really need.

Term Life Insurance 

Term life insurance, as the title suggests, is coverage that exists for an agreed upon “term”, or period of time. Usually, this term is 10, 20, or 30 years.

The sole purpose of term life insurance is to protect your dependents in the case of your death. If you pass away within the coverage term, your family will receive the full payout. Other than this, there is no other monetary value to a term life insurance policy. For this reason, term life insurance is also sometimes known as pure life insurance.

Generally speaking, in a term-based policy, both the death benefit and the premium will remain the same for the lifetime of the coverage.


· Easier to understand
· Generally smaller premiums


· No cash value
· Coverage is not lifelong

Whole Life Insurance  

Also known as permanent life insurance, whole life policies differ from term policies in a few significant structural ways. Firstly, whole life in this case is exactly what it sounds like. Instead of an agreed upon term, coverage is lifelong.

The second biggest difference is that these policies feature a cash value component. As you make payments, the cash value of your policy increases. It becomes possible to borrow against the cash value of the policy and the value of the death benefit. Of course, not paying these loans back (with interest) will reduce the cash value and/or death benefit of the account.

Whole life insurance premiums are significantly higher than they are with term policies. This is due to the fact that there is a cash value as well as a guaranteed payout, whereas many term policies are never paid out at all.


· Accumulate cash value
· Guaranteed death benefit


· More complicated
· Higher premiums

Conclusion: Why Legacy Planning is Important at Any Age 

The decision between term life insurance and whole life insurance is an important one but not as important as the decision to secure life insurance coverage in the first place.

There is no easy way to predict what might happen to you or when it might happen, but it is very possible to predict what your family and dependents will need in order to survive your absence.

 If you’re anything like most Americans, then the thought of buckling down for a life insurance conversation makes you grind your teeth. However, the peace of mind that comes from securing lasting protection for your loved ones is well-worth the endeavor and, frankly, not nearly as difficult as people make it out to be.

For more detailed information on how to quickly and easily get the coverage you need, download our free guide, “The HSA for America Consumer’s Guide to Life Insurance” (PDF) As usual, a Free Life Insurance Quote is only a click away.

To your health and wealth,


Wiley P. Long III
President – HSA for America


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