Skip to Content
Multigenerational family talking on couch representing that different stages require different insurance policy types.
Policy Types

Term insurance vs. permanent life: What to consider

Learn about the differences between term life insurance and permanent life* insurance to decide which is right for you.

If you've been shopping for life insurance, chances are you have discovered that there is a price difference between term life insurance rates compared to the rates of a permanent/cash value life insurance policy. 

Permanent life insurance policies come in many forms such as whole life and universal life. Just like a term life policy, their main purpose is to protect your loved ones against a sudden loss of financial support if you were to die unexpectedly. So if they both do the same thing, why should you dole out the extra money for a permanent/cash value life insurance policy?

The fact is, while both types of policies pay out a death benefit. Depending on your needs there may be some additional considerations for choosing a permanent life insurance policy over term life. Here are three.

Permanent life insurance is designed to last you for life.

Some needs are permanent - such as final expenses, funeral/burial costs, estate liquidity, while others can be more temporary. Only permanent insurance is guaranteed to be there when you need it (assuming you pay the premiums). The primary reason why term life insurance rates are typically less, is that term is considered a temporary policy and at some point in time will become nonrenewable.

Permanent life insurance premiums are fixed for life, term life insurance rates are not.

While the premium for permanent life may be higher initially while you are young, it will never increase as long as there are no policy changes and premiums are paid on time. That's a huge benefit as you get older and not having to face the possibility of your term insurance premium increasing beyond your ability to pay (quite possibly at a time when you'll need your insurance the most).

Permanent life insurance has the potential to build cash value.

Permanent life insurance policies can earn guaranteed cash value in addition to the death benefit protection. This cash value can grow, and be used as the basis for a loan from the policy, used to pay premiums if necessary, or taken as a cash payment in the event you cancel the policy. It's important to note that outstanding loans accrue interest and lower the policy death benefit while cancelling a policy may result in surrender charges. Always discuss the implications of accessing your cash value with your carrier or agent before acting. 

For more information on the different types of life insurance available, visit the Protective Learning Center.


* As long as required premiums are timely made.



Arrows linking indicating relationship

Related Articles

An Army solider returning from deployment and his children run out to meet him.

Veterans life insurance: Which option is best for you?

Learn more
Young mother and daughter at home thinking while mother thinks about whether she should buy life insurance for her child.

Advantages of life insurance for children

Learn more
Middle-aged married couple laughing together.

What is universal life insurance?

Learn more

All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.