The principal difference between term and whole insurance is that with term insurance, premiums paid only go towards a mortality element, as it only pays out if you die within the stated term of the policy. However, with whole of life insurance, the premiums go partly towards a mortality element, with the rest going towards a savings element. Upon death, a fixed sum is paid to the beneficiary along with the balance of the savings account. Over time, a bigger percentage of the fixed premiums tends to go into the savings account. The savings investment (organised by the whole life insurance provider) will be subject to interest rate and inflation risk. Beware that a portion of your premiums will go towards management fees.
You are required to pay premiums throughout your life. Typically, when you reach a certain age, premiums stop, but cover continues. Whole of life insurance policies, because they guarantee a payout, tend to be more expensive than term insurance policies.
*All information displayed in this table is subject to change. Please consult individual insurers for terms and conditions.
