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Two of the most common kinds of life insurance are whole life insurance and term life insurance. Both kinds of life coverage offer pros and cons and which one is best really depends on what the potential policyholder hopes to gain from the coverage.
However, probably the most obvious difference between whole life and term life insurance – and the one people need to think about first – lies in their names. Whole life insurance lasts for life, and term life insurance lasts for a term.
If you purchase a whole life insurance policy, you’re covered for life. This means that as long as you keep your policy (i.e., stay current with your premium payments, don’t cash it in as an investment, etc.), you could died 45 years after you purchase it and it will still be good. In other words, there is no outliving a whole life policy.
Term life insurance, on the other hand, is only good for a specific number of years. Your policy will expire after that term, and if you’re still alive when it expires, the policy is no longer of any use to your family when you actually do pass away. You can try to renew your term life policy once it’s close to expiring, but because term policies can last for as many as 30 years, you could be much older by the time it’s time to try to renew and increased age – which often comes with increased health problems – can make it difficult for you to renew, or renew and still have an affordable premium.