Life insurance comes in two main families: term and permanent. Both pay a benefit to the people you choose if you pass away, but they work differently and suit different goals.
Term life insurance
Term life covers you for a set period, commonly 10, 20 or 30 years. If you pass away during that term, your beneficiaries receive the benefit. If the term ends, the coverage ends, unless you renew or convert it.
- Usually the most affordable way to get a large amount of coverage.
- Often matched to big responsibilities, like a mortgage or raising children.
- Many policies let you convert to permanent coverage later.
Permanent life insurance
Permanent life insurance, such as whole life, covers you for your entire life as long as premiums are paid. Many permanent policies also build a cash value over time.
- Costs more than term for the same benefit amount.
- Coverage does not expire.
- Can play a role in estate planning or leaving a legacy.
How people often choose
A simple way to think about it: term insurance protects your family during the years they depend on your income; permanent insurance protects needs that last a lifetime. Some people combine both.
A good starting question: what would my family need to stay in our home and keep up with life if I were not here?
This article is general information, not advice. A licensed advisor can help you work out the right type and amount of coverage for your situation.
