Term vs Permanent Life Insurance

Term and permanent life insurance can both pay money to a named beneficiary when an insured person dies. They work differently.

Simple guide: The rules and prices depend on the actual plan. Read the contract and ask questions before deciding.

Term insurance

Term coverage lasts for a set number of years if premiums are paid and the policy stays active.

Permanent coverage is designed to last longer, subject to the contract and payments.

Term insurance often costs less at first for the same death benefit, but later renewal prices may be higher.

Some term policies let you switch to permanent insurance before a deadline. Check the rules.

Some permanent policies build a cash value. This is not the same as money in a bank account.

Universal life may include investment choices and changing insurance costs. It can be more complex.

Think about rent or mortgage payments, childcare, debts and the income a family would lose.

Owners may need insurance to help with a buyout or loss of a key person.

Insurers may ask about health and lifestyle before approving coverage.

A new child, home or business can change the amount of protection you need.

Read more in the Financial Learning Centre or contact Ali Aftab. This is general information, not personal insurance, legal, tax or investment advice.