Types of Life Insurance: Term vs. Permanent

by COUNTRY Financial

If somebody asked you about the difference between term and permanent life insurance, could you tell them? It’s okay if not—most people probably couldn’t.

There are multiple types of life insurance, and they all serve a unique purpose. They vary in coverage length, premium costs, cash value and more.

To understand the difference between term and permanent life insurance, think about the idea of renting or owning a home:

• Term life insurance is like renting: you’re covered for a set time and can renew when your term ends.
• Permanent life insurance is like owning a home: as long as you pay your premiums, it’s yours, and it can build cash value (similar to home equity).

Let’s dive deeper into how each works.

Term life insurance

Term life insurance is usually the least expensive option and pays a death benefit only if you pass away within the term. Here's how it works:

• You’re covered for a specific period—usually 10, 15, 20 or 30 years
  •  You can also continue your Term policy past the term by paying premiums that increase annually
• Premiums are generally lower than permanent or whole life insurance
• Your premium stays the same for that chosen term, though longer terms typically cost more

Permanent life insurance

Permanent life insurance provides lifetime coverage and builds cash value over time. There are multiple types of permanent life insurance, but whole life insurance is the most common.

Whole life insurance

Whole life insurance is as its name implies--it protects you for your whole life.

• Lifelong coverage as long as you pay your premiums
• Cash value accumulation, which you can borrow against or withdraw
• Generally guaranteed premiums, though this varies by permanent policy type

Final thoughts

All the types of life insurance can be confusing, and it's hard to know what's best for your family.

If you're considering life insurance and have questions, talk to your insurance agent today. They'll listen to your situation, evaluate your needs, and help you decide what's best for you and your family.

Updated 3-9-26