What is the difference between permanent and temporarily life insurance, also known as term life insurance? I will be explaining the main difference between perm vs term life insurance. Then I will explain the difference between the different level terms . Next we will be explaining other popular term life insurances and finally we will show you the pros & con for owning a term life insurance.

The main difference between permanent & term life insurance is simply that permanent life insurance has cash value accumulation while term life insurance does not. Think of a term similarly to renting while permanent is owning your life insurance. In a term INS when the term ends then the protection ends too. Term life insurance is similar to car insurance, if you don’t use it you lose it. So what does that mean? It means that you must die inside of the term to get the death benefits.
At the end of the term, people can either convert to a permanent life INS (if they qualify) or try to buy another term INS but the cost of insurance will go up and or they may not qualify for protection since they will have aged and their health is worst since starting their original term life INS program.

• The first type of term life insurance is what we call the level term . In the level term you can buy 1 year, 5 years, 10 years, 20 years, and 30 years.
• The first type of level term life insurance is annual renewal term where it renews every year so that means the cost of insurance goes up every year. And is depicted by this graph here.
• The next type of level term is 5 year level which means that the COI goes up every 5 year. Dipicted by this graph right here
• The 3rd type of level term is 10 year level which means that the COI goes up every 10 years. Depicted by this graph right here.
• The next type of level term is 20 & 30 years level which means that the COI goes up every 20 & 30 years. I didn’t draw out this type of level insurance but you get the idea.
  At the end your term one must ask themselves if their term is renewable because some term policies are not renewable due to their health reasons.

The next type of term life insurance what we call the return of premium term. And in a return on premium type term life insurance you will get your premiums back if you don’t die within that term. This type of term may be more expensive and may have tax implications so talk to a licensed professionals and understand what you are buying before you own it.

The next type of term life insurance what we call the group term life insurance. In a group term you get the life insurance program from your employer. The term’s COI is based on the average age of the group. Also the D.B. is based on what the company deems necessary and not actually what your family will need. Since this is a group term policy then you will lose the protection when you stop working at the company.

First let start with the Pros of the term life insurance. In a term life insurance you can have a lot of coverage for very little money. It also easy to buy. This type of protection is good for people that have high risk jobs like fire fighters, police man, etc. and may not be doing that profession their entire life and only uses term life insurance to protect them while they are still in that high risk job. Also it can be use for families that are starting out and have a lot of responsibility and may not have much money to protect their family during their earning years.


Now lets discuss the downside of owning a term life insurance. First downside is there is no cash value accumulation and since there is no cash value accumulation then there is no way a consumer can get free life insurance. In other permanent life insurance such as a properly structured IUL, one can get “free” life insurance. And when I mean “ free” life insurance what I am referring to is that the interest / dividends in my CASH Value are higher then my cost of insurance for the year. Next downside is that a person may not qualify for another type of life insurance when their term ends. Simply because they may be older and their health maybe worst then when they first started their term life insurance program. Like car insurance if you don’t use it you will lose it. And finally most term life insurance does not have living benefits except for the Transamerica Term With Living benefits.

I hope now you can understand the difference between permanent and term life insurances. Also I hope that you can understand the different types of term life insurances. Again I wanted to remind everyone of our mission that we want to educate 1million families on the importance of owning life insurance. If you have any questions about life insurance please reach out to me at [email protected] or learn more at moolahwise.com.