Guide / Policy types
Term or permanent life insurance?
Term insurance covers a stated period; permanent insurance is designed for long-term coverage and can build cash value. Start with how long someone will depend on your support, then compare the cost and conditions needed to keep the policy in force.
Match the policy to the responsibility
A policy should have a job. Write that job as a sentence: “Replace my share of household income while the children depend on it,” or “Leave funds for a dependent who may need lifelong support.” Those are different problems, even when the same person is buying the insurance.
Term policies generally have no cash value. Permanent policies combine insurance with a cash-value component and usually cost more initially for a similar death benefit. See NAIC: Life insurance for the basic distinction.
Compare the contract, not the label
| Question | Term | Permanent |
|---|---|---|
| How long is coverage intended to last? | A stated term | Potentially a lifetime, subject to policy conditions |
| Is there usually cash value? | No | Yes; access and guarantees vary |
| What deserves close attention? | Renewal cost and conversion deadline | Funding requirements, guarantees and surrender charges |
The Texas Department of Insurance: Life insurance guide explains that whole life and universal life work differently. “Permanent” does not mean that payments, policy loans or lapse conditions can be ignored. State-specific protections in that guide describe Texas, not a nationwide rule.
Bring these questions to a licensed agent
- What responsibility am I protecting, and when does it end?
- Which amounts are guaranteed in the contract?
- What would I have to pay to keep this coverage later?
- What happens if I stop paying, reduce coverage or take money out?
Ask for the answers in writing next to the relevant policy provision. Compare the same death benefit and coverage period before deciding that one premium is better value. Keep affordability in the discussion: a policy that strains the household budget deserves another look.
Sources
- NAIC: Life insuranceAccessed 2026-10-07
- Texas Department of Insurance: Life insurance guideAccessed 2026-10-07
Written by Sherpa Desk. General US information; not a personalized recommendation. No specialist review is claimed. Our editorial approach.
