Term vs Permanent Life Insurance

Term Life Insurance: 
This is the rental form of life insurance. This insurance usually lasts between 5 to 30 years in length and the insured can be covered up to the age of 70 or 80 years old, depending on the company and the state. It is effective during the term allotted and ends at the agreed upon time. There are level term (same premium each year) and annually increasing term policies. Term life insurance is more affordable than permanent insurance and is more commonly used.

Permanent Life Insurance: 
This type of life insurance is owned, not rented. There is a cash value component that grows along with the insurance benefit. Funded properly, permanent life insurance stays in force for the rest of your life. There are misconceptions about permanent insurance such as “I’ll have to pay it forever”, which are often incorrect. Examples of permanent life insurance include Whole Life, Universal Life, and can be Variable, Indexed, or completely separate from the securities markets.