What is the main difference?
Term life insurance is designed to provide coverage for a selected period, such as 10, 20 or 30 years, subject to the contract. Permanent life insurance is designed for longer-term coverage—often for life—provided the policy remains in force and its conditions are met.
Term life insurance
Term coverage may suit a period of major financial responsibility, such as raising children, paying a mortgage or replacing income while dependants rely on you.
- Duration: Coverage applies for the selected term.
- Premiums: Initial premiums are often lower than comparable permanent coverage, but pricing depends on age, health, amount, term and insurer.
- At the end of the term: Coverage may end, renew at a higher cost or offer conversion options, depending on the contract.
- Cash value: Traditional term life insurance generally does not build cash value.
Permanent life insurance
Permanent policies are intended for longer-term protection. Some types may include cash value, but features, costs, guarantees and risks vary significantly.
- Duration: Designed to last for life if policy conditions are maintained.
- Premiums: Usually higher initially than term coverage for a similar amount, depending on the policy and underwriting.
- Policy features: Some policies accumulate cash value; how it grows and what is guaranteed depends on the contract.
Which might suit your needs?
There is no universal answer. Your needs may depend on your budget, dependants, debts, long-term goals, existing coverage and how long you want protection. Compare actual policy contracts and illustrations, not just labels or initial premiums.