Term Life Insurance vs. Permanent Life Insurance

Term and permanent life insurance can help protect loved ones financially in case of your untimely passing. Although both offer your beneficiaries a death benefit, each policy differs in several ways. Aflac offers both term and permanent life insurance policies that can give policyholders and their loved ones peace of mind. This article will explain how each policy works and discuss their differences in terms of premiums, coverage length, and wealth-building capabilities.

5 Min Read

Table of Contents

Key Takeaways

Term life insurance provides temporary coverage at lower premiums with no cash value, while permanent life insurance offers lifelong protection and potential cash value growth.
Choosing between term and permanent life insurance depends on coverage length, budget, and long-term financial goals, with earlier enrollment helping secure lower rates.
Aflac offers term, whole, and final expense life insurance policies that come with comprehensive coverage and reasonable premiums.

How term life insurance works

Term life insurance is a type of plan that helps provide temporary coverage for a fixed period. Term lengths generally range from 10 to 30 years. If you pass away while the policy is active, the insurer pays your beneficiaries the death benefit. Keep in mind that the policy will expire if you outlive it. You’ll have to renew your policy if you still want coverage.¹ Aflac offers term life insurance with various term lengths and death benefits to fit your needs.

Types of term life insurance policies

Here are some types of term life insurance to choose from:²

Level term life insurance

Level term life insurance has a fixed death benefit and premiums for the policy’s duration. This helps make level term life insurance the most predictable term life insurance type.

Decreasing term life insurance

Decreasing term life insurance offers a death benefit that decreases over time. Premiums also decrease over time. As a result, this policy may work well if your financial obligations shrink. For example, you may need less coverage if your children graduate college and begin working full-time.

Renewable term life insurance

Renewable term life insurance lets you start a new term life insurance policy at the end of your current term without a medical exam. This helps guarantee term life insurance coverage as you get older and avoid medical exams if you find them inconvenient. However, premiums will increase once you renew the policy.

Peace of mind doesn't have to break the bank

Don’t wait until it’s too late. Help cover yourself and your family with coverage from Aflac.

Get Started

How permanent life insurance works

Permanent life insurance is a type of plan that can offer coverage for life if you continue to pay premiums. As a result, these policies are more expensive. Permanent life insurance can also accumulate cash value with each premium payment. This cash value can grow tax-deferred at a particular rate depending on the policy type. You can then borrow against or withdraw from it when it grows enough. Aflac offers a common type of permanent life insurance, whole life insurance, that can help give you lifelong coverage that suits your needs.

Types of permanent life insurance policies

Here are some permanent life insurance policies you can choose from:

Whole life insurance

Whole life insurance can offer a fixed death benefit and premiums for your entire life. Furthermore, the cash value may grow at a fixed but guaranteed rate based on prevailing interest rates. These features can make whole life insurance one of the most predictable permanent life insurance types.

Universal life insurance

Universal life insurance can let you adjust premiums and death benefits, offering increased flexibility. For example, you can lower your premiums by decreasing your death benefit or secure a larger death benefit by increasing your premiums. The cash value can grow based on market rates. Additionally, universal life insurance generally costs less than whole life insurance.³ However, this can vary based on your circumstances and your insurer.

Final expense insurance

Final expense insurance is a permanent plan designed to help cover funeral costs, burial expenses, and other end-of-life items. It has a small death benefit but offers reasonable premiums and cash value. It may also not require a medical exam.

What are the differences between term and permanent life insurance?

Here are some key differences between term and permanent life insurance:

Coverage length

Term life insurance is usually temporary, meaning it can expire before you pass away. Permanent life insurance can last for life without changes in premiums as long you follow all terms and conditions and keep up on premiums. Some term life insurance policies may let you renew coverage or convert to a permanent life insurance policy. However, premiums may increase.

Cost

Term life insurance tends to charge lower premiums than permanent life insurance. A 30-year, $500,000 term life policy costs an average of $365 per year for a healthy 30-year-old. That same policyholder would pay an average of $4,160 per year for $500,000 in whole life insurance coverage and $2,135 per year for $500,000 in universal life insurance coverage.⁴

Cash value

Permanent life insurance policies may come with cash value, allowing you to build wealth over time that you can tap into by borrowing at favorable terms or withdrawing funds. If you surrender the plan, you can get the cash value minus surrender charges. Term life insurance typically does not come with cash value.

Which life insurance policy should I get?

Choosing between term and permanent life insurance depends on several factors:

How long you need coverage: If you need lifelong coverage, a permanent policy may work better for you. However, a term policy may be best if you only need coverage for a specific timeframe.
Budget: Term life insurance can be reasonably priced and may offer the most death benefit per dollar. But if you have a larger life insurance budget, permanent life insurance may be worth the investment.
Financial planning needs: Those who need additional wealth-building vehicles, such as people who have maxed out retirement accounts, may consider permanent life insurance. It helps offer loved ones financial protection and allows you to build cash value tax-deferred.

Aflac offers term and permanent life insurance

Term life insurance’s reasonable premiums, limited coverage length, and lack of cash value can make it a great option for prospective policyholders who only have temporary coverage needs. A permanent life insurance plan, on the other hand, can work well for people who want the added peace of mind that lifelong coverage helps provide and seek additional avenues to build wealth. Aflac offers both term and whole life insurance policies. Speak with an agent today to help you find the right type of life insurance for your needs and budget.

Get Started

I would like to...

Speak to an Agent

Quote & Apply Online

Notifications from Aflac

Individuals & Families

Business Owners

Agents

Brokers