Choosing between Permanent vs. Term Life Insurance is one of the most important financial decisions you can make. Each type of policy offers different benefits, and selecting the right one depends on your unique financial goals and personal circumstances.
In this guide, we will compare term life vs. permanent life insurance, helping you determine which policy best suits your needs.
What is Term Life Insurance?
Term life insurance provides coverage for a specific period, such as 10, 20, or 30 years. If the policyholder passes away during the term, the insurer pays a tax-free death benefit to the beneficiaries. If the term expires, coverage ends unless the policy is renewed.
Key Features:
- Lower premiums compared to permanent life insurance.
- No cash value accumulation.
- Flexible coverage periods.
- Ideal for temporary financial needs (e.g., mortgage protection, children’s education).
Learn more: What is Term Life Insurance and How Does It Work?
What is Permanent Life Insurance?
Permanent life insurance provides lifetime coverage, ensuring that your beneficiaries receive a death benefit regardless of when you pass away. Unlike term life insurance, it also includes a cash value component, which can grow over time and be accessed during your lifetime.
Key Features:
- Lifetime coverage with guaranteed payouts.
- Builds cash value, which can be borrowed or withdrawn.
- Higher premiums than term life insurance.
- Best for long-term financial planning and estate protection.
Read more: Full Guide to Permanent Life Insurance Policies
Key Differences Between Term and Permanent Life Insurance
Feature |
Term Life Insurance |
Permanent Life Insurance |
Coverage Length |
Fixed (10, 20, 30 years) | Lifetime coverage |
Premiums |
Lower | Higher |
Cash Value |
No | Yes (grows over time) |
Renewability |
Can be renewed, but rates increase | No need to renew |
Best For |
Temporary coverage needs | Estate planning & wealth transfer |
Get a quote today: Compare Life Insurance Plans
Who Should Choose Term Life Insurance?
You should consider term life insurance if:
We need coverage for a specific period (e.g., until your mortgage is paid off).
Some one want affordable premiums.
You don’t need cash value accumulation.
People want flexibility to convert to a permanent policy later.
Read more: How to Get the Best Term Life Insurance Rates
Who Should Choose Permanent Life Insurance?
Permanent life insurance is ideal if:
You want coverage for life with guaranteed payouts.
You like the idea of cash value growth.
You’re focused on estate planning and leaving a legacy.
You have a high net worth and want tax benefits.
Learn more: Permanent Life Insurance vs. Term Life Insurance
Cost Comparison: Term vs. Permanent Life Insurance
Premiums for permanent life insurance are higher because they offer lifelong coverage and cash value accumulation. Below is a general cost comparison:
| Age |
Term Life Insurance ($500,000 Coverage) |
Permanent Life Insurance ($500,000 Coverage) |
| 30 | $20/month | $250/month |
| 40 | $35/month | $400/month |
| 50 | $60/month | $650/month |
Get a personalized quote: Calculate Your Life Insurance Cost
FAQs About Term vs. Permanent Life Insurance
Q1. Can I switch from term life insurance to permanent life insurance?
A: Yes, many term policies offer a conversion option to permanent insurance without requiring medical exams.
Q2. Which is better for young families?
A: Term life insurance is usually the better choice for young families due to its affordability and flexibility.
Q3. Does permanent life insurance offer investment benefits?
A: Yes, the cash value component in permanent life insurance grows over time and can be accessed for loans or withdrawals.
Q4. What happens when my term policy expires?
A: If you don’t renew it, your coverage ends, and there is no payout.
Q5. Can I have both term and permanent life insurance?
A: Yes, many people use a combination of both policies to balance affordability and lifetime protection.
Q6. Is whole life insurance the same as permanent life insurance?
A: Whole life insurance is a type of permanent insurance, but other types like universal life insurance also exist.
Q7. Does term life insurance cover accidental death?
A: Yes, unless the policy states exclusions. Some insurers offer accidental death riders for extra coverage.
Q8. Can I cash out a term life insurance policy?
A: No, term life insurance has no cash value.
Q9. Is permanent life insurance good for retirement planning?
A: Yes, some people use permanent life insurance for tax-advantaged retirement savings.
Q10. Does my life insurance policy pay out if I outlive the term?
A: No, unless you renew or convert it before it expires.
Q11. How much coverage should I get?
A: A good rule is 10-15 times your annual income.
Q12. Can I get life insurance with a pre-existing condition?
A: Yes, but premiums may be higher, and coverage options may be limited.
Q13. What is the best age to buy life insurance?
A: The younger you are, the lower your premiums. Buying in your 20s or 30s is ideal.
Q14. Are premiums tax-deductible in Canada?
A: Generally, life insurance premiums are not tax-deductible for individuals.
Q15. How do I file a life insurance claim?
A: Beneficiaries need to submit a claim with supporting documents to receive the payout.
More FAQs: What to Look for in a Life Insurance Policy
Contact MB Insurance for Expert Life Insurance Solutions
For personalized guidance and assistance with your life insurance needs, contact MB Insurance today:
- Business Name: MB Insurance
- Website: MBEInsurance.ca
- Email: info@mbeinsurance.ca
- Phone Number: +1 (647) 496-6498
- Location: 100 Dynamic Drive, Toronto, ON M1V 5C4
Secure Your Financial Future with the Right Life Insurance
Both term and permanent life insurance serve essential financial purposes. If you need affordable, short-term coverage, term life insurance is the better option. If you want lifetime protection and cash value benefits, permanent life insurance is the way to go.
At MB Insurance, we help you choose the right coverage based on your financial goals.
Get a free quote today at MBEInsurance.ca and secure the best life insurance plan for your needs!
