If you terminate a term life insurance policy, none of the money paid in premiums is recoverable, with few exceptions. Permanent insurance - Provides insurance for the insured's entire life, not just for a limited period, while also providing a savings element known as the plan's cash value. The cash value is available to the policy owner by taking a loan against the cash value, making a partial withdrawal, or terminating the policy. Premiums for permanent coverage will be higher than term insurance because there is not just a chance that the death benefit will be paid out, but it is sure to be paid out. You may elect to pay up the plan with a single payment, or over a period of time such as seven or ten or twenty years, or you may elect to make payments for life.
Permanent plans can have either level or increasing death benefits.
A brief explanation of a few types of term and permanent insurance plans are provided below along with a graphic illustration of each. Premiums for this policy are generally low and will remain level as the death benefit decreases. Level Term - The death benefit and the premium will both remain level until the end of a specified term at which point the policy will be terminated. The premiums for these policies are generally more expensive than decreasing term due to the level death benefit. In the later years of the policy, the premiums continue to increase and can become cost prohibitive.