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Once you’ve decided it’s time to buy life insurance, the big question is whether a term or whole life insurance policy is right for you.

Both achieve the same goal: protecting your loved ones from financial hardship when you aren’t there to provide for them. But they go about doing this in very different ways. To decide which one to buy, a little knowledge is an important thing.

Let’s take a look at what each policy offers and highlight some considerations. By the end of this article, you should have a good idea of whether buying term or whole life insurance is right for you.

What Is Term Life Insurance?

Just as the name implies, term life insurance provides coverage for a set term or number of years. What that means is, if you die during the term of the policy, your beneficiaries receive a lump sum payment.

Here’s an example of how that works. Let’s say you take out $500,000 of term life insurance for 20 years. If you, the policy holder, were to die at year 19, your beneficiaries would receive the half-million dollars. But if the policy ends after 20 years, and you were to die a few months later, there’s no benefit at all.

What’s good about term life insurance is that it can offer coverage when you may need it most. With terms typically running between 10 and 30 years (though other variations are available), this kind of policy can give you the reassurance that, even in the worst-case scenario of your death, expenses like tuition, housing, and daily living costs can still be covered.

Many people purchase a term that will see them through the end of a mortgage or a child’s graduation from college. Some insurance providers offer the option of extending a policy as it comes to its conclusion. This is known as renewable term life insurance; check prices in advance as these extensions can be for a brief time period and tend to be costly.

It’s worth noting that if you buy, say, a 30-year term life insurance policy and are alive at the end of that time period, you don’t get a refund of the funds you’ve doled out. You have paid for protection but you didn’t use it. This may strike some people as “throwing away” their money.

For people who have that sentiment, there are options like “return-of-premium” policies that could help you recoup costs. This kind of life insurance is usually considerably more affordable than whole life, which we’ll explore in a minute. Because you are only buying protection for a specific time period, the premiums (the monthly fee you pay for coverage) are typically lower and are fixed.


💡 Quick Tip: Term life insurance coverage can range from $100K to $8 million. As your life changes, you can increase or decrease your coverage.

What Is Whole Life Insurance?

Whole life insurance is a popular type of permanent life insurance that offers coverage for a lifetime.

Generally speaking, once you get a policy, it stays in effect for the rest of your life, unless you cancel it. When the policy owner passes away, their beneficiaries receive a lump sum payment. This can offer peace of mind and may feel like a necessity if, say, you have a loved one who has a chronic health condition and/or cannot live independently.

Whole life insurance is a more complex financial product than term life insurance. It’s essentially a bundled insurance policy plus savings account. What’s known as “cash value” is built into the policy so you are building equity. Part of your premium (the monthly payment) is usually diverted into a separate account; that account can earn interest and may be tapped, as a loan.

This is not the only kind of life insurance policy with a cash account attached to it. For those who want their cash account to grow in different ways, there are also these kinds of permanent life insurance:

•   Universal life insurance, which earns interest on the cash value account and may allow for flexible monthly payments.

•   Variable life insurance, which allows you to invest the cash part of your policy in stocks, bonds, and mutual funds. While these can grow your money faster, they also bring some degree of financial risk if the market drops.

•   Variable universal life, which gives you the ability to invest your savings account in stocks, bonds, and the like, as well as flexible premiums depending on how your cash value performs.

•   Indexed universal life, in which your cash account is linked to a stock market index. It earns interest based on this index, but often there is a minimum rate of return (as well as a limit on how high the interest can go), which makes it less risky than a variable universal life plan.

In general, whole life and the other kinds of permanent life insurance usually have higher initial premiums than term life insurance (its cost may even be a multiple of what you would pay for term insurance). This is due to its lifelong “in effect” status and the way it can help you grow the money in your cash value account.

Recommended: 8 Popular Types of Life Insurance for Any Age

How Do Term and Whole Life Insurance Differ?

Some people hear the differences between term and whole life insurance policies, and know in an instant which one is right for them. Other people have to mull the options for a while and maybe want to make a “pros vs. cons” list. If you fall into the latter camp, don’t worry. Let us help by summarizing some of the key differences right here.

Difference 1: Policy Features

Difference 2: Costs

The cost of a policy is undoubtedly a huge factor in your decision. So let’s cut to the chase: Whole life insurance costs up to 15 times more than term life for the same amount of coverage.

That’s because whole life insurance provides lifelong coverage and also includes that “cash value” savings component. It’s a more complex financial product, while term insurance is just straightforward coverage for a certain number of years.

Also know that while the cash value portion of a whole life policy can be tax-deferred over the life of the policy, when you redeem the cash value, there are usually tax implications due to the interest accrued.

Recommended: How to Buy Life Insurance in 9 Steps

How to Choose Between Term and Whole Life Insurance

When deciding which kind of policy to buy, there is no hard and fast rule. All that matters is what’s right for you. Consider these questions to help figure out your best option.

1. How long do you need coverage to last?

Do you need coverage to last your entire life, perhaps to fuel a trust for your children or provide a death benefit for a family member with a disability? Then you may be happiest with whole life insurance, meaning a death benefit will be paid, even if you live well past age 100.

If, however, you only need to know that a certain time frame is covered (say, the length of your mortgage or until your youngest graduates from college), then term life may work best for you. A policy can usually be purchased in various increments between 10 and 30 years.

2. Do you want just coverage or savings too?

Some people are just shopping for a policy that offers protection and peace of mind. They want to know that, should they die within a certain time frame, their loved ones would receive money to help cover expenses. For this insurance shopper, a term policy may make sense. It will pay a lump sum benefit if the policy holder dies within the term.

But if you are looking for a product that doesn’t just offer coverage but also helps you save, then a whole life plan may be a good move. These policies also have a cash value account that can grow over the years.

3. How much can you spend on life insurance?

There’s a pretty big disparity in the price of the two main kinds of life insurance. Whole life policies, which deliver ongoing, permanent coverage, typically cost much more than term insurance, which is only active for a limited number of years. Estimates say that a person will have to spend anywhere up to 15 times more for whole life versus term insurance. Also, the interest on the cash value of a whole life policy is usually subject
to taxes as well.

4. Does my age determine whether I should get term or whole life insurance?

In general, your age doesn’t determine whether you should buy term or whole life insurance. For instance, people often purchase a policy when they marry or are expecting their first child. These milestone events mean you have people depending on you, and you may well think now is the time to get life insurance coverage. However, deciding on term insurance that runs until your child’s 21st birthday or whole life insurance which delivers permanent coverage is a matter of personal preference and finances.

There are some cases in which term insurance is likely to be the better bet. For instance, if you and your partner took out a mortgage together, you might want term insurance that covers the length of your home loan. That way, if anything were to happen to you, your spouse doesn’t wind up being solely liable for all that debt.

Another scenario is buying life insurance when you are quite old and want to get coverage. In this case, term life insurance is likely to again be a good bet. You could buy a term of 10 or 20 years if you are in good health.

For those with medical issues, what’s called simplified issue or guaranteed issue term insurance may be best. These are typically small policies that cover end of life expenses, and they require no medical exams.

5. What if I Already Have Life Insurance and Want to Change My Policy?

It’s human to change your mind. No matter how much research you do, time and circumstances can make you rethink your purchase. Some term life insurance policies can be turned into whole life or other types of permanent insurance. This may have to occur within a certain time window, and it’s likely to trigger pricier premiums. Talk to your insurance company about your options. Your term may also be renewable or extendable.

With whole life insurance, changes to the policy may result in surrender charges, since the policy is a permanent one. Check with the policy provider to know what to expect.


💡 Quick Tip: Term life insurance coverage can range from $100K to $8 million. As your life changes, you can increase or decrease your coverage.

The Takeaway

While no one wants to think about their death, the silver lining to life insurance shopping is you know you’ll secure a way to provide for your loved ones when you’re no longer here.

To recap the two different approaches: Term life insurance has a time limit on coverage, and tends to be considerably more affordable. Whole life is a form of permanent life insurance that offers lifelong protection and an additional cash account, but tends to cost much more than term. As you weigh your needs and options, don’t be swayed by what others buy. This is an important financial decision that should be tailored to your specific situation, finances, and aspirations.

SoFi has partnered with Ladder to offer competitive term life insurance policies that are quick to set up and easy to understand. Apply in just minutes and get an instant decision. As your circumstances change, you can update or cancel your policy with no fees and no hassles.

Explore your life insurance options with SoFi Protect.

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderlifeTM policies. SoFi is compensated by Ladder for each issued term life policy.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.


Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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A Master of Business Administration (MBA) degree is a popular degree for professionals looking to change their career or industry, move up within their company, and increase their earning potential. An MBA not only opens doors but, during your course of study, you typically have access to a variety of experiential learning opportunities. This can give you a chance to “try on” different jobs and find the industry and role that suits you best.

Reputable business schools also generally have strong job placement rates in multiple industries and tend to attract a wide mix of corporate recruiters. Indeed, MBA graduates frequently enter fields that are dramatically different from the areas they worked in prior to business school.

Whether you’re thinking about going to business school, are in the process of getting your MBA, or already have an MBA, here’s a look at how you can use this degree as a tool for career reinvention.

Exploring Career Change Opportunities

Before pursuing an MBA or using your MBA to change careers, it’s important to fully think through why you want a career change and exactly what you want to do with your MBA degree. Here are some steps that can help you find a career that matches your interest, skills, and core values.


💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.

Identifying Interests and Transferable Skills

When considering a career change, it’s often helpful to look at the areas where you’ve achieved success and satisfaction in the past, including both your academic and professional career. Looking at these highlights can provide clues into what interests you, what you’re good at, as well as how you might use those skills in a new field.

As you brainstorm, you may want to speak with friends, family members, and your professional network to bounce off ideas and get input on where they could envision you working and thriving. It might also be helpful to speak with a recruiter at a staffing agency or a professional career counselor.

Researching Industries and Job Markets

You might next create a list of careers you’d consider outside of your current industry, then research what job prospects look like in each area. You can use the U.S. Bureau of Labor Statistics employment projections to discover the fastest-growing jobs, along with sites that track average salaries and list top-paying jobs and companies by industry.

Recommended: Is Getting an MBA Worth It?

Exploring an MBA for a Career Change

An MBA is a comprehensive program that can give you an opportunity to update and enhance your existing knowledge and skills and put them into practice. It can also be ideal for exploring different avenues in business management to identify what works best for you.

While completing your degree, you’ll likely get exposed to a range of different business roles. You may discover that you have a passion for finance, strategy, or analysis, or maybe that you are interested in starting your own business as an entrepreneur.

MBA programs can also offer valuable networking opportunities, since they attract a wide variety of students who will likely go on to have business careers. Most B-schools also offer access to vast alumni networks and career fairs to offer additional chances to connect with potential employers and help build your professional network.

Recommended: Tips on How to Pay for MBA School

Choosing the Right MBA Program

To build a new career path with an MBA, it’s important to find an MBA program that fits your particular interests and goals. You might look for programs that offer specialized concentrations that match your desired career path. You can then take a close look at the curriculum and courses to see if they spark your interest.

Geographical location of the college is also something to consider, since it’s generally easier to explore jobs or pursue internships in the local area while completing your MBA.

It’s also a good idea to check the employment report of the previous years to know how many students have successfully managed career transitions and which companies tend to recruit from the school. Consider reaching out to alumni to obtain feedback about the program and their experiences.

Recommended: Examining the True Cost of An MBA Degree

Leveraging MBA Internships

An internship allows you to gain practical experience in a new field and see if it’s a good fit for you while also earning a stipend. Completing a summer or in-school internship during business school is important for all business school students, but it’s particularly key for those who are looking to make a significant career change.

Completing an internship in your target industry or function can also help connect you with the relevant contacts that can shape your next career and help you pursue and achieve your goals. For some career-switchers, a B-school internship can turn into a full-time job after graduation.

Tips for Using an MBA for a Career Change

Once you’ve been out in the work world, changing careers can feel like a mountain to climb, even if you have an additional degree. Here are some tips that can help you navigate a successful career transition.

Crafting a Compelling Career Change Story

Before you start writing your resume, cover letter, or LinkedIn profile, you’ll want to have a clear idea of what your career change story is. What are the main reasons why you decided to switch careers? What are the skills and qualities that you have developed or transferred from your previous roles? How do they relate to your target industry or position? What are the benefits or outcomes that you can deliver to your potential employer? Your core message should be concise, consistent, and relevant to your career goals.

Your career change story is likely not one-size-fits-all. You may want to tailor it to the specific needs, expectations, and values of your target employer. You can do this by researching the company, the industry, and the job description. Once you discover their main problems, goals, and priorities, you can tailor your story towards how you can help them address those issues or achieve those objectives.

Defining Your Personal Brand

The term “personal brand” refers to who you are professionally, separate from who you are as an employee of a certain company. If you can find a way to market who you are, then you can communicate why you’d be a strong worker for a different type of job and/or field.

It can be easier to pivot in your career if you’ve consistently marketed yourself and the skills you bring to the table. Here are some suggestions for building your personal brand:

•   Create a personal website or portfolio

•   Prepare an “elevator pitch” about what you do

•   Be active on social media platforms like LinkedIn, Twitter, or Facebook

•   Find ways to network

•   Revamp your resume to reflect your brand

Leveraging Your Degree

Once you have an MBA degree, it’s important to highlight your degree and MBA specialization on your resume so it’s easier for an employer to see where you’re most capable. You can also highlight how you have invested in your professional development, not just through your graduate degree but also through attending workshops, reading books, or joining networks.

If you are making a significant career switch, you may want to let potential employers know how you have applied or practiced what you have learned, such as working on projects, volunteering, or freelancing. Showing your learning and growth demonstrates your commitment, curiosity, and adaptability to the new career.


💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.

Covering the Cost of Your Education

Pursuing an MBA program can be a valuable asset for those looking to change careers, but it comes with a significant price tag. The average cost of an MBA in the U.S. is $225,605,which is no small sum.

Fortunately, many business schools award merit-based fellowships, grants and scholarships to help students pay for school. This is funding you typically don’t need to pay back. And, generally, you don’t have to fill out a separate application to be considered for institutional merit aid. Often, you are automatically considered when you apply to a business school.

If you’re working, your employer may offer education benefits that partially or fully sponsor a graduate business degree. Consider reaching out to human resources to see what benefits your company offers and the requirements that come with them.

If you still have gaps in funding, you might consider taking out a federal or private student loan. The federal government offers two types of loans for graduate school students: Unsubsidized Direct Loans and graduate PLUS Loans. You generally want to max out Unsubsidized Direct Loans before turning to graduate PLUS loans, which come with higher interest rates. You might also explore getting an MBA student loan from a private lender. Just remember that, even if you find a private student loan with a lower rate than a grad PLUS Loan, it probably won’t include the same benefits and protections that federal student loans provide.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

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