Term vs. Permanent Life Insurance

Two broad categories of life insurance, with different structures, costs, and uses.

This is an educational comparison, not a recommendation. Which option (if any) fits your situation depends on your circumstances — see the key questions in the last row, and discuss them with a qualified professional.

Category	Term Life	Permanent Life
Purpose	Temporary income/debt protection for a set period	Lifelong coverage paired with a cash-value component
Potential return	None — pure protection, no cash value	Cash value may grow, subject to the contract's guarantees and non-guaranteed elements
Risk	Coverage ends if the term expires or premiums lapse	Cash value growth (where non-guaranteed) depends on the insurer's crediting method or investment performance
Liquidity	None — no cash value to access	Cash value may be accessible via loans or withdrawals, subject to contract terms and potential tax consequences
Taxes	Death benefit is generally income-tax-free to beneficiaries	Death benefit generally income-tax-free; cash value grows tax-deferred, subject to policy rules
Fees	Generally lower premiums for the coverage amount	Premiums include insurance cost plus policy and administrative expenses
Guarantees	Level premium and death benefit for the term, per contract	Varies by product — some guarantees, some non-guaranteed elements depending on policy type
Complexity	Relatively simple	More complex — cash value mechanics vary by product type
Time horizon	Matches a specific need (e.g., years remaining on a mortgage)	Designed for lifelong needs or long-term legacy goals
Key questions	Is the coverage convertible? What happens at the end of the term?	What are the guaranteed vs. non-guaranteed elements? What are the surrender charges and fees?