Step 5 of 7
Term or whole life?
There's no single right answer, but planners ask the same four questions:
How long will I need the coverage?
- Leans term
- Until the kids graduate or the loan is paid, usually 10 to 20 years
- Leans whole life
- For life, and you'll keep the policy for well over 10 years
Will I really invest the difference?
- Leans term
- Yes, automatically, every month
- Leans whole life
- Honestly, probably not
How do I feel about investment risk?
- Leans term
- Comfortable investing on my own
- Leans whole life
- I prefer guarantees and forced savings
Can I afford enough coverage?
- Leans term
- Term gives the most coverage per peso
- Leans whole life
- Only if the premium still buys enough coverage
| Ask yourself | Leans term | Leans whole life |
|---|---|---|
| How long will I need the coverage? | Until the kids graduate or the loan is paid, usually 10 to 20 years | For life, and you'll keep the policy for well over 10 years |
| Will I really invest the difference? | Yes, automatically, every month | Honestly, probably not |
| How do I feel about investment risk? | Comfortable investing on my own | I prefer guarantees and forced savings |
| Can I afford enough coverage? | Term gives the most coverage per peso | Only if the premium still buys enough coverage |
Term: strengths and watch-outs
Cheapest and easiest to compare, and easy to reduce or stop when needs shrink. But premiums jump when you renew at an older age, and it only works if you invest the savings.
Whole life: strengths and watch-outs
Level premiums and lifetime coverage, and it builds cash value as a form of forced savings. But it's expensive for young families on tight budgets, with little or no cash value if you quit in the early years.