Choosing between term and permanent life insurance can feel overwhelming, as each type has unique benefits suited to different needs. Here’s a breakdown to help you determine which might be the better option for you.

What Is Term Life Insurance?

Term life insurance offers coverage for a set period, such as 10, 20, or 30 years. Here’s how it works:

• Coverage Duration: You select a term length, during which your beneficiaries are protected. If you pass away during this time, they receive the policy’s death benefit.
• Premiums: Term policies often have lower initial premiums, especially appealing for younger individuals. However, once the term expires, renewing typically results in higher premiums.
• Conversion Options: Some term policies allow you to convert to permanent coverage, offering flexibility if your needs change over time.

Who Needs Term Life Insurance?
Term insurance is ideal for affordable, temporary coverage. It’s a great choice if you’re a young family, a homeowner with a mortgage, or a business owner who needs protection for a specific period. For instance, if you have a mortgage you’ll pay off in 25 years, a 30-year term policy can provide peace of mind that your family won’t lose their home if something happens to you within that time.

Advantages of Term Life Insurance:

• Cost-effective for younger individuals.
• Simple to understand and manage.
• Allows for a high coverage amount at a lower price.

Disadvantages of Term Life Insurance:

• Coverage is temporary; it ends when the term expires.
• Renewing after the term ends can lead to increased premiums.
• No cash value or investment component, so it doesn’t build savings.

What Is Permanent Life Insurance?

Unlike term insurance, permanent life insurance covers you for your entire life, as long as premiums are paid. Here’s a closer look:

• Lifelong Coverage: Permanent insurance never expires, providing coverage for as long as you live.
• Premium Stability: Premiums typically remain consistent throughout your life, making them more predictable in the long run.
• Cash Value: Many permanent policies come with a cash value component that grows over time, allowing for potential borrowing or withdrawal. This feature offers a tax-advantaged growth opportunity and additional financial flexibility.

Who Needs Permanent Life Insurance?
Permanent insurance is ideal for those with long-term financial needs, especially if you’re interested in estate planning, covering lifelong dependents, or creating an inheritance. It’s also suitable for those who want the option to access cash value, as it allows for borrowing or withdrawals over time.

Advantages of Permanent Life Insurance:

• Guaranteed lifetime coverage.
• Fixed premiums that don’t increase with age.
• Builds cash value, offering savings or borrowing options.
• Useful for estate planning or leaving a legacy.

Disadvantages of Permanent Life Insurance:

• Generally, more expensive than term insurance.
• Cash value growth might be slower than traditional investments.

Can You Have Both?

Yes! Some people choose to combine term and permanent policies to cover both temporary and long-term needs. For example, you could opt for a term policy to cover immediate obligations like a mortgage and a permanent policy for lifelong coverage, such as estate planning or funeral expenses.

This strategy provides high coverage for short-term needs and lifelong protection, creating a well-rounded financial safety net.

When Should You Convert Your Term Policy to Permanent?

If you already have term life insurance and find your needs changing, converting to permanent coverage can make sense. This might be especially useful if you need lifelong protection for estate planning or want a policy that builds cash value over time.

Converting offers the advantage of keeping the existing policy without having to go through new medical exams, which can be beneficial as you age or if your health has changed.

How to Apply

Both term and permanent life insurance usually require a basic medical underwriting process. While most permanent policies require a medical exam, some, like guaranteed life insurance, waive this requirement.

For smaller policies, you can get quotes and apply online, while larger coverage amounts often require working with an advisor who can tailor options to your needs.

Making the Right Choice

Deciding between term and permanent life insurance depends on your financial goals, situation, and what you want your policy to accomplish. Term insurance is cost-effective and perfect for temporary needs, while permanent insurance offers lifetime coverage with added benefits like cash value growth.

Choosing the right policy isn’t about which one is “better”—it’s about what works best for your life stage, goals, and financial situation. Speaking with an advisor can help you make an informed decision based on your specific needs, ensuring the best coverage for you and your loved ones.