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  • Robyn Saito

Making Decisions About Life Insurance

Updated: Dec 29, 2021

Man is Mortal.

That makes life insurance a little unique and interesting, doesn’t it? We purchase things like health insurance, car insurance, and home insurance, then hope we never have a need to use them. Life insurance is different because it’s a widely accepted fact that, sooner or later, each one of us will die.


So many choices.

When it comes to life insurance, there are many options. You may have heard terms like “whole life insurance,” “term insurance,” or “variable insurance,” but what do they all mean? And what are the differences? Well, first let me point out what they have in common: all life insurance policies provide payment to a beneficiary in the event of your death. Except for that basic tenet, the differences between policies can be major.


Whole life insurance.

This type of insurance covers your entire life (not just a portion or a “term” of it). Insurance companies tend to be cautious when selecting their investments, so the benefits could be, potentially, lower than if you invested on your own. Whole life policies also tend to cost more than “term” policies. This is both because they grow what is known as “cash value,” and, after a certain period of time, youwill be able to borrow against or withdraw from your whole life benefits.


Term insurance.

Rather than covering your whole life, “term” insurance covers a pre-determined portion of your life. If you die within that term, your beneficiaries receive a death benefit. If not, generally, you get nothing. To put it simply, term insurance allows you to purchase more coverage for less money. Basically, you are betting on the probability of your death occurring within that specified “term.”