Term vs. Permanent Life Insurance
Compare term and permanent life insurance, including coverage length, premiums, cash value, policy risks and questions to ask before buying.
Term and permanent life insurance can both provide a death benefit, but they are designed differently. The better fit depends on the financial need, desired coverage period, budget, and policy features.
Term life insurance
Term insurance covers a stated period, such as 10, 20, or 30 years. It is often considered for needs that may decline or end over time, including income replacement, mortgage obligations, or a limited business need. Initial premiums are often lower than permanent coverage, but renewal premiums may rise and coverage may end at a stated age. Most term policies do not build cash value.
Permanent life insurance
Permanent insurance is designed to remain in force for a longer period when required premiums are paid and policy requirements are met. Common forms include whole life and universal life. These policies may accumulate cash value and generally cost more than term insurance for the same initial death benefit.
Guarantees, premiums, cash values, and policy risks vary by contract. Loans and withdrawals can reduce cash value and the death benefit, may cause a policy to lapse, and may have tax consequences. Non-guaranteed illustrations are not promises of future results.
Questions to ask
How much coverage is needed? How long will it be needed? Is the premium affordable? What happens if assumptions change? What exclusions apply? Is replacing existing coverage being considered?
Do not cancel an existing policy until new coverage is issued, accepted, and reviewed. Replacements can restart contestability or surrender-charge periods.
Disclosure: Insurance availability, pricing, benefits, exclusions, and guarantees depend on eligibility, policy terms, state availability, and the issuing insurer’s claims-paying ability. General education only.
Source: National Association of Insurance Commissioners consumer guidance.
Get in touch
630-749-2539
info@moffatfinancial.com
Privacy Policy · Terms of Use
West Wealth Group Form CRS
Services are offered nationwide only where Moffat Financial and its representatives are properly licensed, registered or otherwise authorized to conduct business.
Investment advisory services offered through West Wealth Group, LLC, an SEC Registered Investment Adviser. Investing involves risk, including loss of principal.
General education, not personalized investment, tax or legal advice. Insurance and annuity guarantees depend on policy terms and the issuing insurer’s claims-paying ability. Annuities are not FDIC insured.
