Premium rates for term policies are typically lower than those for permanent ones (if applying for the same coverage), but there are tradeoffs. For one, premiums on term policies typically go up substantially at the end of the initial term – usually 10, 20 or 30 years. And, if you stop paying premiums for any reason, you are no longer eligible to receive death proceeds and your family’s financial future could be at risk. Term policies are good for financial obligations that end, like a home mortgage or education costs.
On the other hand, permanent policies (aka Whole Life policies) are good for retirement planning, income replacement, and ongoing financial obligations like caring for a family member with a disability. Permanent policies can accrue cash value and stay in force as long as you pay the premium. They may require a medical exam but usually have fixed premiums that won’t go up even if your health takes a turn for the worse. It’s an important decision to make and an important question to discuss with your agent.