Should I Buy Term or Permanent Life Insurance?

Shawn Plummer

CEO, The Annuity Expert

Term insurance or permanent life insurance? Which life insurance should I buy? This guide will weigh your options to help you make a better decision.

Term Life Insurance vs. Permanent Life Insurance

Term Insurance

With a term life insurance policy, you pay premiums for a set number of years called the term. If you die during that time, the insurance company pays the death benefit to your beneficiaries, the people you choose to receive it. If you don’t die during the term, you and the insurance company can part ways, or you may be able to renew the policy, but your premiums will increase a lot.

Term insurance usually provides the most considerable amount of insurance protection at the lowest initial cost. For this reason, it’s the type most people start with.

Because term policies end at a specific point—the end of the term —they are best for protecting large needs with specific endpoints. Typical periods you might choose term insurance to protect include the time:

  • Remaining on your mortgage obligation.
  • You plan to continue to work and have others relying on your income.
  • Remaining on an outstanding business or other loans.

Permanent Insurance

Permanent life insurance is different. There is no set term. It lasts your entire lifetime as long as you continue to pay the premiums. It pays a death benefit if you die and has a cash value component that can grow over time.

Permanent insurance (whole life insurance) is designed to last as long as you live and typically makes a good supplement to term insurance. However, you will likely still want insurance after your term coverage ends, either for life-long or unplanned needs or with unpredictable or extended end dates. Good reasons to have permanent insurance include helping to take care of:

Why Build Cash Value in a Life Insurance Policy?

Because the cash value is a benefit for living, through tax-free loans and withdrawals, the cash value can help fund retirement, pay for college, and deal with unexpected emergencies.

Remember, to have enough cash value for a loan or withdrawal, you want to fund your policy properly.

Compare Term With Permanent Life Insurance Quotes

Use our calculator to compare rates from term and permanent life insurance to determine what you can afford.

Next Steps

Term life insurance is often the better choice for young adults and those with families. If you are older, have a policy that will cover you until retirement, or can’t afford the premiums on a permanent policy, then whole life insurance may be a good option. No matter your situation, we can help you find the right life insurance policy for your needs. Contact us today for a quote.

Should I Buy Term Or Permanent Life Insurance?

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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