In short
Term, for almost everyone. If you need to protect an income or a mortgage for a known number of years, term life does that job at a fraction of the price: about $34 a month at 35 for $500,000 of 20-year coverage, against a typical $270 to $410 a month for whole life with the same death benefit. Whole life makes sense only when the need is permanent, such as estate liquidity, a dependent who will always need support, or a business buy-sell agreement, and when the budget can carry the premium for decades.
Term and whole life insurance pay the same thing: a death benefit to the people you name. They differ in how long they last and what they cost. Term lasts 10 to 30 years and costs little. Whole life lasts as long as you keep paying and costs a lot, because the insurer expects to pay every claim eventually and part of each premium funds a cash value account.
Nectar sells term only, so read our answer knowing that. The test is simple: match the product to how long the need lasts. The NAIC, which coordinates state insurance regulators, publishes a consumer buyer's guide to both kinds of policy.
What is the difference between term and whole life insurance?
| Term life (Nectar Term) | Whole life | |
|---|---|---|
| How long it lasts | 10 to 30 years, your choice | Your whole life, while premiums are paid |
| Cost at 35 for $500,000, 20-year term | About $34 a month for a man, $28 for a woman | Typically $270 to $410 a month for a man, $225 to $335 for a woman |
| Cash value | None | Builds slowly; a guaranteed minimum plus possible dividends |
| Premium | Level for the term, then the policy ends | Level for life |
| Built for | Income, mortgage, children at home | Estate liquidity, lifelong dependents, business buy-sell |
The term figures are Nectar Term estimates for the preferred non-tobacco class; the final price is set during underwriting. The whole life figures are a typical range, roughly 8 to 12 times the term price, not a quote. We do not sell whole life.
What does whole life cash value actually earn?
Less than the brochure implies. In the early years most of the premium goes to the cost of insurance, commissions and expenses, so the cash value typically starts near zero. After that it grows at a guaranteed rate, typically in the low single digits, plus dividends that are not guaranteed. In a standard whole life policy your beneficiaries receive the death benefit, not the death benefit plus the cash value.
Hence "buy term and invest the difference". At 35, the gap between a $34 term premium and a $270 to $410 whole life premium is roughly $240 to $375 a month, about $57,000 to $90,000 over a 20-year term before any growth. The catch is the word "invest". If the difference drifts into the monthly budget, you end up with term insurance and no savings.
A whole life policy that lapses in year seven is the most expensive insurance you can buy: roughly ten times the term price, and you walk away with a small cash value. If you cannot see yourself paying the premium for 30 years, do not start.
See what Nectar Term would cost you
Two minutes to a price, with your approval odds up front. No calls unless you ask.
When does whole life, or converting a term policy, make sense?
Whole life earns its price when the need never expires:
- Estate liquidity. An estate that will owe estate tax, or one made of things that cannot be sold quickly, where heirs need cash for taxes or to buy out siblings.
- A dependent with lifelong needs. A child with a disability who will need support after you die, usually through a special needs trust named as beneficiary.
- A business buy-sell agreement. Partners insure each other so the survivor can buy the deceased partner's share.
For everyone else, the middle path is a term policy with a conversion privilege. Most term policies, including Nectar Term, let you convert some or all of the coverage to a permanent policy, without new health questions, before a deadline printed in the policy. Converting makes sense when your health has changed, when a temporary need has become permanent, or when you want a small permanent piece for final expenses and let the rest expire. How Nectar Term works covers the end-of-term options.
If your need is a mortgage and children at home, start with a Nectar Term estimate: the price and your approval odds show in two minutes, and how much life insurance you need gives you the amount to enter.
See what Nectar Term would cost you
Two minutes to a price, with your approval odds up front. No calls unless you ask.
Frequently asked questions
Is whole life insurance a good investment?
Judged as an investment, rarely. The guaranteed growth is low, dividends are not guaranteed, and the early years go to costs. It is a conservative savings vehicle attached to permanent coverage, which suits a few situations, not a substitute for a retirement account.
Can I convert term life insurance to whole life?
Usually, if your policy has a conversion privilege and you act before its deadline. There are no new health questions; the new premium is based on your age at conversion and the permanent product the issuing insurer offers.
What happens to a term policy when the term ends?
Coverage ends. Many policies allow annual renewal at much higher prices, and most allow conversion before the term ends. People who still need coverage usually buy a new term policy while they are healthy or convert part of the old one.
Is term life insurance worth it if I outlive the term?
Yes, in the way car insurance was worth it in a year you did not crash. You paid a small, fixed amount for the years your family was exposed. Outliving the term is the outcome you wanted.
Why is whole life so much more expensive than term?
The insurer expects to pay every whole life claim eventually, so it collects enough to fund the full death benefit plus a cash value, and the early premiums typically carry higher commissions. Term is priced on the small chance that a healthy person dies during a fixed window.
Nectar Term policies are issued by Nectar's partner insurers, each rated A or better by A.M. Best, and serviced by Nectar. Prices in this article are estimates calibrated to published 2026 averages and are not an offer of coverage. Final rates are set during underwriting.
Keep reading
BasicsFinal Expense Insurance vs Term Life: Which Should You Buy?
Final expense insurance vs term life: if you are 60 or under and qualify, $100,000 of 10-year term costs about $36 a month at 55, far less per dollar.
BasicsLife Insurance Contestability Period: The Two-Year Rule
Life insurance contestability period: typically two years, when the insurer can check your application before paying. After it, claims are generally paid.
BasicsLife Insurance Grace Period and Lapse: Missed Payment Rules
Life insurance grace period and lapse: most policies give 31 days to pay while coverage continues; after that it lapses but can usually be reinstated.