Life Insurance: The Great Debate
life insurance debate


A Necessity

Americans agree that having a life insurance policy is a necessity, as roughly 60% have one. Whether they have a term or whole life policy usually depends on their understanding of life insurance, their financial situation and wealth planning style. In today’s ELP Budgeting Services blog post we provide clarity into term vs. whole life insurance and prepare you to make the best decision for your personal situation.

Key Differences

At ELP Budgeting Services, we are committed to providing financial education to the masses through our ELP University membership. Life insurance is one of the key wealth planning components clients seek out financial education. You may have heard of both term and whole life insurance policies, but do not know the key differences. Let’s dissect the differences in coverage duration, premiums, cash value and investment aspect and ultimately help you decide what’s best for you and your family.

Coverage Duration

Term life insurance provides coverage for a set period, often 10 to 30 years. If the insured person passes away during the pre-established period, the policy pays out the death benefit to the beneficiaries. As long as the premiums are paid on a whole life policy, the coverage remains active from policy initiation to the insured’s death.


The cost in premium, or monthly payment to maintain coverage, is one of the greatest differences between term and whole life insurance. Term life generally has lower premiums compared to whole life insurance. It’s more affordable during the specific period when you need coverage (e.g., when you have young children). Whole life comes with higher premiums due to its permanent nature and additional features.

Cash Value and Investment

In addition, another key difference between policies is the ability to increase in value or not. Term life insurance is pure insurance coverage, has no investment component and doesn’t accumulate any cash value. Whole life insurance includes a cash value component that grows over time. Part of your premium goes into this cash value, which you can access during your lifetime through loans or withdrawals. Whole life policies combine insurance with an investment feature where the cash value can grow tax-deferred and be used for various purposes.

Which One is Best for You?

So how do you decide which policy you should pursue? The below list of key considerations will provide clarity to choose between term and whole life insurance:

  1. Purpose:

    Is your purpose for obtaining life insurance to ensure your final expenses and family’s needs are covered OR to create a financial legacy establishing tax free wealth? If the former, term life insurance is likely sufficient. If the latter, whole life may be the way to go.

  2. Health:

    Do you anticipate maintaining good health or do you have hereditary illnesses that require you to consider in the future? While no one can guess what their health will bring, it may save one who is not currently healthy or anticipates health considerations, to obtain a whole life policy and eliminate the premium health variable.

  3. Affordability:

    Can you afford the high premiums associated with whole life insurance, or in an emergency will it be the first expense cut or borrowed against? If your answer is no, ELP Budgeting Services recommends saving the difference in premiums and obtaining a low-cost term life policy.

  4. Current Investing Avenues:

    Whole life insurance brokers will emphasize the potential growth opportunities of a whole life policy. What they may not ask or consider is the insured’s other investing avenues. If you are investing in retirement, brokerage accounts, real estate, etc., you are likely already surpassing the benefits a whole life policy will offer you. In fact, you may be able to accelerate this growth by saving on the premiums and investing the difference.

  5. Future wealth:

    If you speak with anyone on the path to generational wealth, they’ll tell you they don’t have or anticipate not having life insurance. Sounds crazy right?! It’s actually not. Their mindset is they will be their own broker. They are preparing the way to have enough wealth amassed through consistent, effective investing. Any expenses incurred at their death will not only be covered, but will be enough to ensure the next generation is also wealthy. Are you on a set path of wealth generation? Until you achieve wealth, a term policy may be the best bet. Saving on the high premiums and building upon the considerations in number 4.

We Can Help

In conclusion, ELP Budgeting Services consistently emphasizes that our goal through ELP University is to educate not advise. We won’t act like we have a clear-cut answer for you to decide which life insurance type is best for you. We do, however, hope that with the above education and considerations, you will be able to make the most educated decision for you and your family. Looking for more detailed assistance and help with establishing an investment plan? ELP University is for you. Need help with wealth protection, try our low cost Legacy Binder.  ELP Budgeting Services is committed to your overall wealth health and helping you to Earn. Live. Plan.