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Explainer · 2 min

Term vs permanent life insurance

The two main kinds of life insurance, side by side. Pricing varies by age, health, carrier and product.

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Two ways to protect

Term

Coverage for a set period.

Permanent

Coverage for life.

Term life covers you for a set period, like 20 years. Permanent life is designed to cover you for your whole life.

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The timeline

Age 35Age 55Age 75Age 9520-year termcoverage ends unless renewed or convertedlifelong coverage
A 20-year term policy bought at 35 covers you to 55, then ends unless renewed or converted. A permanent policy keeps going for life.

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Cash value

Age 35Age 55Age 75Age 95lifelong coveragecash value can build over timepolicy charges applyloans and withdrawals reduce the death benefit

Cash value is a policy feature, not an investment account.

Permanent policies can build cash value over time. Policy charges apply, and loans or withdrawals reduce the death benefit.

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Premiums, conceptually

Term usually costs less for the same coverage amount. Permanent usually costs more, in exchange for lifelong coverage and cash value.

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Which fits?

Young family, mortgage, income to replace

→ Term is often a fit

Want coverage that never expires or a defined legacy

→ Permanent is often a fit

Want both

→ Some families combine them, or choose a convertible term policy

Different situations point to different answers, and some families use both.

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Takeaway

There's no one right answer, only the right fit for your situation.

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The right choice depends on what you're protecting and for how long.

Features, guarantees and costs vary by carrier, product and state. Guarantees are backed by the claims-paying ability of the issuing carrier.

General education only, not individual insurance, financial, tax or legal advice. Examples are hypothetical and don't represent any specific product.