What is the difference between term and permanent life insurance?
Term life insurance covers a defined period. If the insured dies during that term, the policy pays; when the term ends, coverage ends unless it is renewed or converted under the policy's terms. Term coverage generally starts with lower premiums for a comparable initial death benefit and usually builds no cash value.
Permanent life insurance is designed to last for life, as long as required premiums are paid and policy conditions are met. It usually includes cash value. Whole, universal, indexed universal and variable life are different designs with different guarantees, flexibility, costs and risks.
Neither is better in general. The fit depends on how long the financial need lasts, what it is, affordability, health and insurability, the guarantees involved, and other resources available. A licensed insurance professional reviews specific policies.
Reviewed by Bay Area Wealth Advisors. Last reviewed 2026-09-28. Educational information only — not individualized financial, tax or legal advice.