Term vs whole life insurance: which one, and how much do you need?
Term covers you for a set number of years. Whole life covers you for life and costs more. Here is how to choose, and how much to think about.
Last checked October 18, 2026 · Written by licensed advisors · Sources are numbered and listed under Notes and sources
What is term life insurance?
Term life insurance covers you for a set number of years. If you die during the term, it pays your beneficiaries.
It usually costs less than permanent coverage, because it does not build cash value. When the term ends, the coverage stops unless you renew or convert.1
- A set number of years
- Lower cost
- No cash value
- Ends when the term ends
What is whole life insurance?
Whole life is a type of permanent insurance. It covers you for your whole life and builds cash value over time.
Because of that savings element, the premiums are higher than term for the same amount of coverage.1
Term vs whole life: which one should I get?
Term often fits when people depend on your income for a set time, such as while kids are growing up or a mortgage is paid down.
Whole life can fit when you want coverage that lasts and can pay the higher premium. It costs more each month than term for the same amount.
Your age and health set the price. The younger and healthier you are when you apply, the less it usually costs.1
- Covers a set number of years
- Lower premium
- No cash value
- Ends when the term ends
- Covers your whole life
- Higher premium
- Builds cash value
- Lasts as long as you pay
What to do: Tell us your budget and who depends on you. We compare real quotes for both.
How much life insurance do I need?
Some experts suggest five to eight times your yearly income. That is only a starting point.
A better answer adds up what your family would need: lost income, debts, final costs and school costs.
We work it out with you, without pushing a bigger policy than you need.1
Is life insurance taxable?
Life insurance paid because someone died is generally not taxable income to the person who receives it. Some parts can be taxed, such as interest paid on the proceeds.
Whole life cash value has its own tax rules when you take it out. Estate taxes can also matter for large estates.2
Heads up: This is general information, not tax advice. Ask your tax preparer about your situation.