Term vs. Permanent Life Insurance: Which Is Right for You?
It's the most common question I get: "Should I buy term or permanent life insurance?" The honest answer is that it depends on what you need the insurance to do. Here's a plain-language comparison.
The short version
How long it lasts: term covers a set period, such as 10, 20 or 30 years. Permanent covers your whole life.
Cost: term is lower for the same amount of coverage. Permanent costs more.
Cash value: term has none. Permanent can build cash value over time.
Best for: term suits temporary needs like a mortgage, income replacement and raising kids. Permanent suits lifelong needs like final expenses, estate taxes and leaving a legacy.
When term usually makes sense
Term is built for needs that end. If your main worry is "What happens to my family and our mortgage if I die in the next 20 years?", term gives you the most coverage for your budget. When the mortgage is paid off and the kids are grown, you may need much less coverage.
When permanent usually makes sense
Some needs never go away. Final expenses will happen at some point. Capital gains on a cottage, investments or a business may be taxed at death. If you want to leave a set amount to your children or a charity, permanent coverage can be there whenever that time comes.
"Buy term and invest the difference"
This is a popular strategy: buy cheaper term coverage and invest the money you save. It can work well, but only if you actually invest the difference consistently, and it leaves you without coverage once the term ends. Permanent insurance builds in the discipline but costs more. Neither is right for everyone.
Why not both?
Many families use a layered approach: a larger term policy for the high-need years, plus a smaller permanent policy for lifelong needs. Some term policies can also be converted to permanent coverage later without new medical evidence, which adds flexibility.
Questions to ask yourself
What do I need the money to pay for?
Will that need go away, or last my whole life?
What can I comfortably afford each month, now and later?
Do I have estate or business planning goals?
Not sure which fits? I'll show you term, permanent and combined options side by side, from several insurers. Call Matt at 289-880-6364.
This article is general information, not advice for your specific situation.
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