What type of insurance typically has lower premiums, term or whole life?

Term life insurance typically has lower premiums compared to whole life insurance. This is primarily because term life insurance provides coverage for a specific period (the "term") and does not include a cash value component, which means that it is generally more affordable. The premiums for term life insurance are based on the likelihood of the insured passing away during the term, and since it does not accumulate cash value or provide lifelong coverage, the overall cost is lower.

Whole life insurance, on the other hand, includes an investment component that builds cash value over time, along with the death benefit. The presence of this cash value and the fact that whole life insurance is designed to provide coverage for the insured's entire life contribute to higher premiums.

Understanding the distinctions between these types of insurance is crucial for clients when evaluating their options based on budget constraints and their long-term insurance needs. Term life insurance is often recommended for individuals looking for affordable coverage for a specific period, such as to cover debts or for family needs during child-rearing years.