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Term vs. Whole Life Insurance: What You Need to Know

Term vs. Whole Life Insurance: What You Need to Know

August 07, 2021

Life insurance is necessary when you have people who rely on your income in some way, but it can be a confusing and difficult topic to break down. Are you single? Do you have a mortgage? Would you want your parents to have your home as an asset if you were to die? Do you have co-signed debt? Do you have a partner or children who rely on you financially? If any of these situations apply to you, it is time to consider buying life insurance.

When it comes to life insurance, the end-all debate is about whether to purchase a term or whole life policy. Although the outcome as far as death benefits of term and life insurance are similar, there are distinct differences in how the two types otherwise play out.

Advocates of term life insurance say that it is the best way to go because of its economical pricing and ample coverage. Those in favor of permanent life insurance insist it is superior because of its lifetime coverage and the potential to accumulate cash value. The bottom line is that there are pros and cons to both types of life insurance. At Triumph Capital, we are here to help with every aspect of your financial life. As a fiduciary financial advisor, can we help you make informed decisions regarding what type of life insurance is best for your unique situation.   

When choosing life insurance coverage for you and your family, we recommend first considering how much of your budget you are willing to allocate towards the policy as well as how long you will need this type of financial protection. Our team of experts and specialized online tools can help you assess your unique life insurance needs.

With term life insurance being the easier of the two options to understand and offering the lowest prices, it is no wonder that so many experts recommend purchasing it. Term life insurance will cover you for a fixed length of time, such as 10, 20, or 30 years. If you or your spouse dies during any of the years in the designated timeframe, your beneficiaries will receive a payout. If you do not pass away during that time, your coverage will end, and no money will go to you or your dependents. Conversely, whole life insurance can provide you with lifelong coverage and extra financial support during retirement through a cash-value account.

So, who might term life insurance be a good fit for? People who realize the value of life insurance but want a low-cost product for their family’s protection. A term life insurance plan is also a good option for someone looking to replace their income to help their spouse cover the day-to-day bills and expenses of life in case of their death. It is also a practical option for parents who just need coverage until their children are financially independent. For instance, if you have a toddler and want to make sure he or she is taken care of in case of tragedy, purchasing a 20-year term life insurance policy will cover you until that two-year-old is 22 – and perhaps a college graduate or embarking on a career of their own.

Another scenario where term life insurance makes sense is if you would like to put a policy in place to help pay for specific co-signed debts. Co-signed debts may include a mortgage, student loans, or something else. For people with a guaranteed retirement income or a set plan to have a significant amount of money saved for their retirement years, term life insurance is a great fit. Some advocates believe that buying term life insurance and investing additional money is a wise strategy. But again, both types of insurance have pros and cons.

Whole life insurance, also known as cash value insurance, provides financial coverage for your whole life and includes a cash accumulation component that can grow over time. The cash value grows slowly, but the gains are tax-deferred. Proponents of whole life insurance consider it to be a more conservative, tax-advantaged approach. Since you are not just paying for insurance, these policies cost more than term life insurance. Whole life insurance is designed to build cash value and those who purchase it can enjoy the ease of one monthly payment that essentially serves as both insurance and a savings account. Whole life insurance is an excellent option for people who are interested in the cash value component.

The complexities of whole life insurance necessitate the need to work with a qualified and trusted financial advisor to ensure that the policy will fit your long-term financial goals. Whole life insurance can be a great fit for someone who prefers coverage to last for their entire life without having to worry about when it expires. If possible, it is wise to purchase whole life insurance at a young age, when you are in good health.

Life insurance may not be the easiest thing to think or talk about, but our team of experienced advisors is here to help. No one can see the future, and ultimately the price of being unprepared is much higher than the cost of term or whole life insurance. If you are on the market for life insurance, get in touch with us today. Visit us online to schedule your complimentary consultation: Triumph Capital Management, or book with us directly: Book Your Complimentary Consultation. 



Triumph Capital Management

1610 Wynkoop Street Suite 550

Denver, CO 80202



Advisory services offered through Triumph Capital Management, a registered investment advisor SEC#282814. Insurance Services offered through Triumph Capital, LLC #619821