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Writer's pictureVincent F. D'Amico

Term and permanent insurance, what's the difference?


Life insurance can be confusing to the consumer because there are many names associated with it. Some of the names you may have heard are as follow: term, whole life, universal life, variable life, index universal life, mortgage insurance. With all that being said, all you have to know is that there are 2 types of life insurance. There is term and there is permanent.

A simple analogy is to think of term insurance as renting and permanent insurance as owning a home.

Term Insurance Permanent Insurance

*it's less expensive initially *it's more expensive initially

*cost will go up over time *cost will remain level

*doesn't build any equity *builds equity over time

*coverage ends *coverage for your lifetime

So when is one better than the other? It all depends on your budget and what you are trying to accomplish with the life insurance.

I have many clients that either have term or permanent and some that have a combination. Some people will get a term policy to cover their 30 yr mortgage and they will also get a small permanent policy, like whole life, to cover final expenses.

There are many uses for life insurance, and as you can see many names. At the end of the day, it's best to determine what your needs are to figure out what type will work best for you and your family.


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