Term vs whole life insurance: which is better?

You pick a face amount and a term, most commonly 10, 20, or 30 years, and the premium is locked for that period. If you die during the term, the beneficiary receives the face amount tax free. If you outlive it, coverage simply ends with no payout and no cash value unless you exercised a conversion option.

The advantage is leverage. A level term policy buys a very large death benefit for a small monthly premium, which is what makes $1 million of coverage achievable for a Texas household protecting a mortgage and young children. The disadvantage is that it is temporary, so it solves time-limited problems and nothing else.

Whole life is permanent: the premium is fixed for life, the death benefit is guaranteed to pay eventually, and the policy accumulates cash value on a guaranteed schedule. It is the only product that combines lifelong coverage with a fixed premium and a contractual savings element you can borrow against.

It costs substantially more per month for the same face amount. That is not a flaw in the product, it is the price of permanence, and it means the same monthly budget buys far less protection than an equivalent term policy would.

Match the product to the shape of the need. A mortgage, income replacement until the kids are grown, and a business loan have end dates, so term is the efficient answer. Final expenses, a special-needs dependent who will need support for life, a permanent estate liquidity need, or a policy you want in force at 85 are permanent obligations, and that is where whole life earns its cost. The mistake to avoid is buying a small permanent policy as the main protection and leaving the mortgage and income years underinsured.