Understand the fundamental differences between temporary and permanent coverage.
The single biggest decision in life insurance is choosing between term and permanent (whole) coverage. They serve different purposes, have dramatically different costs, and fit different life stages. Here's how to think about each.
Most people should buy term life insurance. Here's why:
Whole life makes sense in specific situations: lifelong dependents, complex estate planning, or if you simply value the certainty of a guaranteed payout no matter when you die.
Yes. Some people buy a large term policy for income replacement during their working years and a smaller whole life policy for final expenses or estate planning.
For most people, no. Whole life cash value typically grows at 2–4% per year, which is lower than historical stock market returns. It's better to think of whole life as insurance with a savings component, not an investment.