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Term vs IUL: which fits you?

An honest side-by-side, including when term is the better call.

Summers Ahead Editorial
4 min read
The short version
  • Term: more coverage per dollar, then it ends.
  • IUL: lifelong coverage plus cash value, at a higher cost.
  • The right answer depends on your goal and budget.

Both pay your family if you die. The difference is how long they last, what they cost and whether they build anything you can use.

TermIUL
How long10 to 30 yearsLifelong, if funded
CostLowerHigher
Cash valueNoneYes, index-linked
FlexibilityFixed premiumAdjustable within limits
Moving partsFewCaps, fees, loans

A general comparison. Your agent shows the numbers for your situation.

When term is the better call

If your main goal is the most coverage for the least money while your kids are young or your mortgage is big, term is hard to beat.

When IUL makes sense

If you want coverage that does not expire, have no pension, and can put in a steady amount for 10 years or more, IUL can do double duty as protection and savings.

Some people do both

A term policy for the big years, plus a smaller IUL for lifelong coverage and cash value. A good agent will show you the numbers for each.

Go deeper with the free guideTerm vs IUL, side by side, A planning worksheet and 8 questions to ask any agent.
Get Beyond the Death Benefit ›
Keep reading
What is IUL? A plain-English explainerLife insurance with a savings side, and what "indexed" really means.3 min readThe 0% floor and caps, explainedWhy a down market does not cost you a credit, and why a great one is capped.3 min readBorrowing from your cash valueHow policy loans work, what they cost, and where they go wrong.3 min read

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¹ Index-linked interest is never credited below 0%; policy charges still apply and can reduce cash value. Caps and participation rates limit upside. ² Policy loans accrue interest and reduce the death benefit and cash value if unpaid. Tax treatment depends on your situation.