Term life insurance or whole life insurance?

For many people the question of whole or term life insurance will come down to the cost, and that is the main reason term life insurance is the most common form of life insurance in the UK. There are also many people who claim it is the only form of life insurance they will need, protecting them at their period of greatest financial responsibility, and not protecting them in their later years when their mortgage has been fully paid off, and the children have left home and become financially independent.

Whole life insurance fans will point to the guaranteed return on investment, and the fact customers can borrow money against their final payout in later life, effectively supplementing the amount of money they have to spend in retirement.

With whole life insurance costing around eight times more than term life insurance, but guaranteeing a return, there are obvious benefits to both. For most people, term life insurance is the cheaper option, and is certainly better than no life insurance at all. If you were to save the difference in cost into an ISA, or your pension, you may find that your retirement is just as enjoyable anyway.

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