Term life is the less expensive option. These policies provide coverage for a specific number of years (10, 20, 30, etc.). The beneficiary receives proceeds only if you pass before the term ends. Most policies are renewable but expect to pay more for the next term. Age affects pricing, and you will be older when the initial policy expires.
Some term contracts have a conversion clause whereby the policyholder can switch to permanent coverage. Ask the life insurance agent for details on the conversion period, cost, and policy features if you are interested in this option.
Consider a term policy if you have an outstanding mortgage, are looking to provide income to dependents for a specific number of years, or have a tight budget.
Cash value insurance offers permanent coverage provided premiums are paid. Whole life, variable life, universal life, and indexed universal life are examples of permanent life products. Permanent policies cost more because they have added features. Among these is an investment component commonly known as cash value.
Cash value refers to tax-deferred money that accumulates over time, typically at a guaranteed rate. You can borrow against the policy's cash value, but the loan must be paid back with interest. The policy benefit is reduced if a death claim is submitted before repayment.
Check contract specifics for other features. Some policies yield dividends, offer payment flexibility, and more.
Permanent insurance (cash value) may be a better fit for long-term financial goals that include estate planning or providing funds for a trust account.