Term insurance is designed to be a cost-effective way to meet a specific and temporary need. First, it provides protection for the duration, or term, of the policy. Second, it is usually only paying out a benefit if the insured person dies during the term of the policy. Term insurance makes sense if you anticipate needing coverage to protect you for a certain time frame, such as 5, 10, 15, 20, or 30 years. Term insurance is an excellent plan if you desire coverage that will provide peace of mind for a set amount of time. For example, you want protection to cover your home mortgage until it is paid off, which has 15 years left to pay off, a 15-year term policy may make sense.
Permanent insurance provides lifelong protection. This type of insurance is desirable because once the policy is in effect, it is guaranteed for life as long as premiums are paid. With a permanent policy, you do not have to worry about re-qualifying for coverage if your health condition changes as long as the policy stays in force. There are several types of permanent insurance including whole life insurance, variable life insurance, universal life insurance, and variable universal life insurance. Permanent life insurance products cost more than term insurance but have the primary benefit of accumulating cash value.