What is the difference between term and whole life insurance?

Term life insurance and whole life insurance are two of the primary types of life insurance policies offered by many companies, including Northwestern Mutual. The fundamental difference between the two lies in their structure and purpose. Term life insurance provides coverage for a specified period, typically ranging from ten to thirty years. It is designed to provide financial protection to beneficiaries in the event of the policyholder's death during the term of the policy. If the policyholder passes away within that timeframe, the beneficiaries receive the death benefit. However, if the policyholder outlives the term, the coverage ends, and no benefit is paid out. Generally, term life insurance is more affordable than whole life insurance, making it a popular choice for those seeking temporary coverage or those who want coverage during pivotal life stages, such as raising children or paying off a mortgage. In contrast, whole life insurance offers lifelong coverage as long as the premiums are paid. This type of policy includes both a death benefit for beneficiaries and a cash value component that accumulates over time. The cash value grows at a guaranteed rate and can be borrowed against or withdrawn, providing a potential source of funds during the policyholder's lifetime. Whole life insurance tends to have higher premiums in comparison to term life due to its lifelong coverage and cash value feature. Choosing between term and whole life insurance ultimately depends on individual financial goals, family needs, and budget considerations. It is advisable to carefully assess personal circumstances and goals before deciding on the appropriate policy type. For additional details about insurance options, interested individuals may look for resources on the Northwestern Mutual website.