Deciding to purchase life insurance is a good move. A move that ensures your loved ones’ futures are protected. But before you purchase a life insurance policy, it’s important to understand the differences between the two main types of coverage — whole and term life insurance. Here’s what you need to know to compare and contrast these two types of coverage.

Term Life Insurance

A simple way to think about term life insurance is to view it as temporary coverage. With this coverage type, your premiums remain fixed for the term (set number of years). You can opt to continue coverage when the term runs out, but the premiums may increase (significantly). This policy type is designed to provide a death benefit to your beneficiaries should you pass away during the term of your coverage.

Why Choose a Term Policy?

Cost: Term policies generally have a low premium, creating an affordable way to get the coverage you need.

Who Should Choose This Policy Type?

Because of the low cost, term life policies are an attractive option for younger people and families.

Permanent Life Insurance

Two options for permanent life insurance include whole life and universal life.

Whole Life Insurance:

A whole life insurance policy is a permanent option, which offers protection for your entire lifetime as long as premiums are kept current.

Why Purchase a Whole Life Policy?

Coverage for Life: One major benefit of a whole life insurance policy is that you’ll have coverage for life. Since coverage is guaranteed for life you won’t have to worry about the premiums increasing as you grow older.

Accumulated Cash Value: As you pay your premiums your policy will accumulate a cash value. This cash value grows on a tax-deferred basis, which can allow your funds to grow faster. And, with a whole life policy you have the option to borrow against your policy.

Who Should Choose This Policy Type?

Because the premium cost is typically higher on a whole life policy, this option may be more attractive to you when you have more income to put toward premiums. You may want to borrow against your accumulated cash value to create a supplemental income for things like long-term care,¹ retirement or keeping a business in your family.²

Universal Life Insurance (UL):

An additional form of permanent life insurance is universal life insurance. UL policies differ from other life products because they offer flexible protection and flexible payments. UL policies build an accumulated value based on your premium payments. You can use the accumulated value to borrow against while you’re still living for things like purchasing a home, starting a business, or even creating supplemental income for your retirement.²

Find the right fit for you.

We understand your life insurance needs change over time. We can help you choose the right type of life insurance that fits your needs through all of life’s changes. Each option differs in price and coverage characteristics, but all serve as protection for those who matter most to you. No matter which type of coverage you choose, life insurance premiums are almost always lower when you’re younger and healthier, so don’t wait! Contact your Farm Bureau agent to schedule a SuperCheck® to discuss your specific life insurance needs.


¹ Life insurance and its riders can provide some financial protection in your later years, but should not be viewed as a replacement for long-term care or disability income insurance. 

² Withdrawals may be subject to fees and/or considered a taxable event. Any loans from the policy’s accumulated value will reduce the accumulated value and death benefit if the borrowed funds, plus interest, are not repaid by the time of your death.