The key difference between term and whole life insurance is simple. Term life pays the face amount of the policy in the event of your death, while whole life combines a term policy with an added investment component. Yes, whole life may sound like a better deal — the trouble is it’s the least cost-effective option because you end up paying for both the insurance and investment components.
The bottom line: Don’t waste your money on a whole life policy. Instead, buy term insurance to protect your family’s standard of living in the event of your early demise — then invest the savings.
Photo Credit: Steve Snodgrass