Term Insurance

As the name implies, Term Insurance provides protection/coverage for a specified period of time. A term policy  for 20 years is common, but you can get term protection for anywhere from 1 to 30 years. This type of coverage might make the most sense when you need coverage for a set period of time, say until your kids graduate college or the mortgage is paid off.

 

Term insurance offers the greatest amount of coverage for the lowest initial cost (premium), making it a good choice for young families or people on a tight budget. But it only pays a benefit if you die during that term. It does not offer any potential internal cash value build up like you could get with a Permanent policy.

 

Permanent Insurance

This type of policy offers you lifelong protection, including a death benefit and the added advantage of accumulating in cash value tax-deferred. (It’s like having insurance and an investment in one policy.) And any cash accrued from the policy can be withdrawn to pay for personal expenses or bills, or as a supplement to your retirement income