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Written by Reed Tinsley, CPA | September 28, 2026
How to Choose Life Insurance
You have many life insurance choices, and a key one is deciding between term and whole life. Term life insurance lasts for a set number of years, usually 20 to 30. If you die before the term ends, your term life policy pays out to your beneficiaries. Whole life insurance lasts longer, usually until you reach a certain age, such as 100. Essentially, this policy lasts your entire life. When you die, it pays out your death benefit to your beneficiaries.
Whole life insurance also builds a cash value. A portion of your monthly premiums goes toward building this extra cash. When it reaches a certain point, you can take out loans against this cash value, which you will have to pay back, or surrender your policy to receive the money it’s accumulated.
Because it lasts your entire life and builds cash, whole life insurance costs more than term life.
So, which life insurance type is right for you? That depends.
The Case for Term Life Insurance
Term life insurance is the right choice for most. That’s because this insurance is affordable while still providing a financial safety net for your loved ones.
You can choose the length of your term life policy. Maybe you have young children. You might choose a policy with a 20-year term. That way, it will last until your children are no longer financially dependent on you. You can choose a longer or shorter term.
If you die during your policy’s term, it will pay out your death benefit to your beneficiaries. You can choose the size of this benefit. If you choose a term life policy with a $500,000 death benefit, you’ll pay more in annual premiums than if your death benefit is a lower $200,000.
Fidelity Life says that a $500,000 term life insurance policy costs an average of $19.30 a month for a healthy 30-year-old non-smoker. That comes out to an average of $231.60 a year.
This cost will vary according to the size of your death benefit, the length of your term and your age and health when taking out your policy. Liberty Mutual estimates that a healthy 30-year-old woman can get a $20,000 term life insurance policy for less than $8 a month.
But What About Whole Life?
If you’re willing to spend a bit more, a whole life policy does come with certain advantages.
First, it lasts your entire life. You won’t have to worry about your policy expiring. If you want to protect your loved ones for your entire life, a whole life policy might be a better choice.
Then there’s the cash value component. Unlike term life insurance policies, your whole life insurance policy will earn value over time. This value grows at a rate set by your insurer. Your policy might also pay you regular dividends, depending on your policy terms.
These benefits come at a cost, though. Aflac says that a whole life insurance policy of $500,000 costs an average of $451 a month for a 30-year-old non-smoker in good health. That comes out to $5,412 a year.
That’s significantly more expensive than a term life insurance policy. Whether you choose term or whole life depends on how long you want your life insurance protection to last and how much you want to pay for it. That more affordable price tag? It’s why term remains the most popular form of life insurance. Speak with an independent financial expert to get advice on what's right for you.
Additional Life Insurance Resources:
- Understanding Life Insurance
- 4 Reasons Why You Need to Review Your Life Insurance Needs
- How Much Life Insurance Do You Need?
