Life insurance can sometimes be a complicated subject to understand. One aspect that might be confusing is the different types of policies that are available. But luckily, with some research, you’ll be able to get a better understanding of your options.

Two common life insurance policies are term life and whole life insurance. While both will provide you coverage, how the coverage is provided can vary based on term length, cash value, and other features. Knowing the difference between term life insurance vs. whole life insurance will help you decide on which is right for you. Here are some key differences between the two:

Coverage length

Perhaps the biggest difference between term life insurance and whole life insurance is the coverage length. Term life insurance provides you coverage for only a set period of time. The length of the term can be anywhere between a year to up to 40 years. In contrast, whole life insurance provides coverage that lasts for the insurer’s lifetime. It remains active so long as the insurer continues to make premium payments.

Cash value

Term life insurance has no cash value. After the end of your policy, you won’t receive any money. Whole life insurance features cash value as a part of the policy. When you make a premium payment, a portion of it gets added to the policy’s cash value. You’re able to access that money at any time if you need it. When borrowing against the cash value of your life insurance, the insurance company uses your policy as collateral. No credit check or approval is required for getting the loan.

Be mindful that when paying back the loan, it does accrue interest over time. If you fail to pay it back, you risk the loan exceeding the policy’s cash value, which can cause your policy to lapse. There are no requirements for how you can use the loan. It can be used to help supplement retirement income, creating an investment portfolio, or paying off your policy premium. The cash value growth is tax deferred. The insured doesn’t have to pay any taxes on the growth unless they surrender the policy and take the money out.

Premium costs

When it comes to premiums, term life insurance generally has a lower cost than whole life insurance. This is because whole life insurance covers the insurer’s entire life and offers extra features such as a cash value account. It’s estimated that whole life premiums are about 5 to 15 times more than a term policy with a similar death benefit1.

One advantage of whole life insurance premiums is the cost remains the same. When you renew a term life insurance policy at an older age, the premium cost will increase. Nonetheless, the premium won’t increase during the term period.


Term life insurance policies do not pay dividends, whereas most whole life insurance policies are participating policies. That means you can potentially earn dividends based on the company’s financial performance. This dividend you earn can help to boost your policy’s cash value. Be sure to keep all these differences in mind when deciding whether term or whole life insurance is right for your needs.


1 Investopedia. “Term vs. Whole Life Insurance: What’s the Difference?” Published May 23, 2022.

Coverage is underwritten by Aflac. Coverage may not be available in all states, including but not limited to NJ, NM, and NY. Benefits/premium rates may vary based on plan selected. Optional riders may be available at an additional cost. Plans and riders may also contain a waiting period. Refer to the exact plans and riders for benefit details, definitions, limitations and exclusions. For availability and costs, please contact your local Aflac agent/producer. In Arkansas, Idaho, Oklahoma and Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400 and Riders: ICC1368050, ICC1368051, ICC1368052, ICC1368053, ICC1368054, ICC1368055.

Content within this article is for informational purposes only and does not constitute legal, financial or medical advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer will have to consider in their benefits decision-making process.

WWHQ | 1932 Wynnton Road | Columbus, GA  31999