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Term Life Insurance vs. Other Types of Life Insurance

Life Insurance Comparison
Insurance Quotes 2 Day Team

Written By Doug Mitchell

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA.  Doug has spent close to 30 years in the insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health.  Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

Holly Mitchell  &

Holly Mitchell’s background in life insurance insurance goes back to 1985 when she worked for her father who was a New York Life agent. Holly has a marketing degree from Auburn University and has had a life insurance license since 2008. In addition to advising life insurance for customers all around the country, Holly is our website fact checker.

Rob Pinner   &

Rob Pinner is the founder and CEO of Pinner Financial Services servicing all 50 states. Rob started his insurance career in 2002.

Louis LaBash

Results-driven and innovative life insurance professional with 30 plus years of life insurance industry sales and marketing experience. Recognized as a pioneer in the field, leveraging phone and internet channels to exceed personal sales of over $100 million during the first decade of the 21st century. Creator of a highly effective intuitive IUL life insurance sales software that facilitated the sale of millions of dollars of indexed universal policies by numerous life insurance agents. Proven track record as a Managing General Agent (MGA), Life Agent, IUL Life Insurance Sales Software developer, and leading-edge creator of insurance marketing tools, educational content, and delivery systems.

 6 minute read

Are you looking for life insurance? Compare life insurance types and policies to find the right fit. You can choose from several different types of life insurance.

The best life insurance policies ensure you’ll be covered, have affordable payments, and receive adequate compensation. Read on to learn about the five types of life insurance and how to choose the right one.

What Is Term Life Insurance?

Term life insurance is a temporary policy that covers you for between ten and 30 years; the length of the term depends on your preference. Often considered “pure” life insurance, the policy has no benefit when it runs out. Instead, you either purchase a new policy or go without it.

Term life insurance comes with various pros and cons worth considering.

Pro: Cost

The most significant benefit of term life insurance is its cost. Since it only covers you for a specific time, the monthly payments are relatively low and never change.

Even though the payments are affordable, you can still obtain substantial coverage. The larger the face amount of the policy, the higher the premiums will be. You must maintain your monthly premiums to receive the benefits.

Choose a term life policy if cost and monthly payments are your primary concern and you are looking for affordable life insurance.

Pro: Conversion Opportunity

When the coverage period for your term life insurance runs out, many providers allow you to convert some or all of the policy into permanent insurance. You can convert before the time ends, transferring the remaining balance to your new policy.

Choose a term life policy if you plan on converting it to a permanent life insurance policy later in life.

Con: Late-Life Availability

Obtaining an affordable term life insurance policy becomes difficult later in life. When the policy term expires, you can often renew it on a year-by-year basis. However, the costs increase dramatically the older you get.

Your health also dictates whether you can obtain a term policy later in life. The insurance company can deny you coverage

due to pre-existing medical conditions.

Other life insurance options exist if you’re older or not in good health.

Con: No Equity

Some permanent plans pay dividends, and every plan grows in value as it ages. For some plans, the growth in equity is enough to pay the policy’s premiums. The increase in equity also grants unique tax benefits.

While equity grows, you can use the policy to borrow against in the case of emergencies or life’s financial challenges. The growth is only a fraction of what other investments yield, but it’s better than nothing.

Choose a different insurance policy if you need to consider your policy an investment or prefer to think long-term about your finances.

What Are Other Types of Life Insurance?

In addition to term life, you have several other options for life insurance coverage, all of which are permanent.

What Are Other Types of Life Insurance

Whole Life Insurance

As long as you pay your premiums, whole life insurance pays benefits no matter when you die. It is the most straightforward permanent life insurance policy. A whole-life policy deposits part of your premium into a savings account that builds value over time.

Whole life insurance benefits you in three primary ways:

  • You lock your premium in for life: no increases!
  • Beneficiaries receive death benefits no matter when you die.
  • The cash value grows at a guaranteed rate.

Whole-life policies are excellent life insurance for retirees because you can use the cash value as part of your monthly income. Purchase the policy early to increase lifetime value.

Universal Life Insurance

Universal life insurance is like a whole life policy without the locked-in premiums. You can adjust your premiums month-to-month according to your circumstances. If you’re having financial issues, premiums can be skipped or adjusted. Paying less early means you pay more later in life, but you have the freedom to choose.

For those looking to use their policy to accumulate cash, indexed universal life insurance is a great option.  The interest credited is based on certain index allocations like S&P, NASDAQ or Dow Jones.

You might want to consider a universal life insurance policy if your monthly income is variable.

Variable Life Insurance

Variable life insurance is a high-risk policy. Like whole and universal insurance, you select a guaranteed death benefit amount. The policy pays out the benefit as long as you pay your premiums.

The difference occurs in the policy’s cash value (not the death benefit amount). Like a retirement account, the cash value varies depending on your chosen investments.

While your death benefit remains the same, good investing increases your cash value and may add to your death benefit.

Choose variable life insurance if you’re good with risk and a wise investor.

Pros and Cons of Different Types of Life Insurance

You can compare life insurance options using the following list of pros and cons.

Whole Life Insurance

  • Pro: Guaranteed life-long death benefits
  • Pro: Locked-in premiums
  • Pro: Guaranteed cash value growth
  • Con: Premiums are more expensive than term life
  • Con: No control over your cash value

Universal Life Insurance

  • Pro: Guaranteed life-long death benefits
  • Pro: You control the premiums
  • Con: Paying less early may require you to pay more later
  • Con: No control over your cash value

Variable Life Insurance

  • Pro: Guaranteed life-long death benefits
  • Pro: You control your premiums and can choose your investments
  • Con: High risk
  • Con: Most expensive option.

Factors to Consider When Choosing a Policy

When you conduct your life insurance comparison, consider the following to choose what’s best for you.

How Much Do I Need?

As a general rule, your death benefit needs to cover any outstanding debt. This includes mortgage payments and consumer debt. Benefits should also pay for the funeral and leave a little nest egg.

If the surviving spouse can’t work, you may want your policy to cover the rest of their life or give them enough time to find a job.

How Much Can I Pay?

If you have a stable income, you won’t need a universal policy or could afford the riskier variable policy. If money is tight, consider term insurance. If your income is inconsistent, you may benefit from the flexibility of a universal policy.

Also, consider how adept you are at investing and whether you want the cash benefits of permanent plans to support your retirement income.

How Is My Health?

A term life policy is less risky if you are in excellent health and have a strong family history of good health late into life. If you’re still determining whether you’ll be approved for a term life policy or if you may need help converting or renewing it later in life, a permanent policy is right for you.

How to Get Life Insurance

You can get life insurance by talking to a licensed life insurance agent or purchasing a policy online. At, we have advisors standing by, and you can also request and compare quotes through our website.


Frequently Asked Questions

Here are the questions people most frequently ask when they compare life insurance options.

How Can I Choose a Beneficiary?

Your beneficiary can be anyone, including a charity or organization. However, some states have laws dictating who can receive the money. If you designate a minor, the funds may fall under the control of their guardian. When you choose a beneficiary, work with your agent to understand state laws and guidelines. Also, consider who could use the money the best. If you decide not to name a beneficiary, the probate court decides what happens to the funds.

What Factors Affect Premiums?

Your demographics and health directly affect your premiums. Smokers and older individuals pay higher premiums. Insurance companies also account for your gender, height, weight, risky lifestyle factors, and general health when deciding your premium.

What Happens If I Miss a Premium Payment?

Your company likely has a grace period for the payment, usually 31 days. If you fail to pay the premium in that time, the company will terminate your policy.

Can a Senior Citizen Get Life Insurance?

Most insurance providers have a maximum age to which they provide insurance. You should be able to get insurance until you are at least 79 years old. Some companies have increased their age limit to 90 years old. Remember that, regardless of the age limit, your premiums increase the older you get.

Do You Get Money Back from a Term Life Policy?

If your term life policy expires before you die, your beneficiaries won't receive any money. The policy only disburses upon your death. That's why term life is so affordable; there's no equity. You use it or lose it.

author avatar
Doug Mitchell, CLU Independant Advisor
Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA. Doug has spent almost 30 years in the life insurance industry and has also held licenses to sell securities, long-term care insurance and home and auto insurance. Doug is a Top of the Table Million Dollar Round Table member (MDRT).  MDRT is a global, independent association of the world's leading life insurance advisors.  For two years, Doug served as President of the Auburn Opelika Association of Financial Advisors and has been a member of the Million Dollar Round Table. He obtained Life Millionaire status at Horace Mann Insurance Company and was awarded the Life Agent of the Year Award. Later in his career with New York Life he was an Executive Council Member. Doug currently serves as President of Ogletree Financial, a managing general agency serving life insurance agents and clients in all parts of the United States. Today, Doug’s main focus is servicing 1000s of policyholders and growing the agency through the reach of