What is the difference between Term and Permanent/Whole Life Insurance?

Term Life Insurance coverage has a specific start and end date. Rates are usually locked in and will remain the same over the length of the term (usually between 10 and 20 years). At the end of the term, the owner of the coverage will stop paying their premium and the coverage will no longer exist.  The need for insurance is short term and that need will one day expire. For example a 20-year mortgage, or replacing one’s income for a specific number of years.

Permanent/Whole Life Insurance coverage is usually purchased for a need that will never go away.  Such as capital gains owed at one’s death, or any other cash bequests for people or causes important to the deceased. It often comes with an investment component called “cash value” that grows tax sheltered inside the policy and can be accessed for various reasons throughout the life of the policy.

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