When considering life insurance, one of the questions you’ll encounter is whether to buy Term Insurance or Permanent Insurance. Emotions sometimes run high on both sides of the argument, so let’s break it down and then you decide.

The word “term” means the number of years the life insurance policy will remain at the same price. Therefore, “Ten Year Term Insurance” is term with level premiums for ten years, after which the premiums will either go up—fast and dramatically—or the policy will just terminate. The downside to term insurance, if we can call it a downside, is that you might outlive the “term.” The upside is that Term Insurance is usually very affordable, and therefore has enabled millions of Americans to purchase large amounts of insurance protection.

These days there are four common term insurance choices: 10 Year Term, 15 Year Term, 20 Year Term or 30 Year Term. In all cases the premium is level for the term period. In addition, most term policies will permit you to “convert” the term insurance to “permanent insurance” during the term period.   

The primary use of Term Insurance is to provide protection for a need that is not “permanent.” Examples of this would include mortgage protection, or insurance to protect minor children, or to protect a business if a key person died.

“Permanent Insurance” is meant to last for the rest of your life, and includes “Whole Life,” “Universal Life” and “Variable Life.” Permanent Insurance is more expensive than term because it is providing protection for the “whole life.” In other words, rather than providing insurance protection for fifteen or twenty years, Permanent Insurance usually charges the same premium all the way to age ninety-five – sometimes even up to age 121! Most Permanent policies also have Cash Value, which is like a savings account inside of your insurance.

Both types of insurance have a specific purpose—neither is “better” than the other. If you have questions about which type is suitable for you just ask one of our professional staff.