You have probably heard of both term life insurance and whole life insurance. Some people are buying term, some people are buying life, and you are just trying to figure out the difference between the two so you will know which life insurance will better fit your needs.

Lets start with the most commonly purchased and often considered the more practical of the two, term life insurance. Although term life insurance expires without maturity and its premiums increase at the time of renewal depending on your age, it is still considered a great option for people with temporary or short time insurance needs, people who are just beginning in the work force and do not have much money to spend on life insurance, and/or people who foresee their insurance needs changing in the future. It is generally less expensive than whole life insurance and you can choose the exact time period you want to be covered.

Whole life insurance, on the other hand, insures you for your entire life. A whole life insurance policy usually has fixed premiums and can be cashed in or turned into cash advances. Sometimes whole life insurance offers a paid-up insurance option, which means you can terminate your policy at any time yet still remain covered at an adjusted coverage level. Whole life insurance is the best choice if you are experiencing long term needs and have the financial ability to cover them.

Both term life and whole life insurance are nontaxable.

Take into consideration your health needs and financial status when choosing your insurance policy, and choose the life insurance that best fits your needs at the time of purchase. Since most term life insurance policies can usually be converted into whole life insurance policies at a later date, you may want to consider starting with a term life insurance policy and adjusting it according to your needs and financial status as they change.