Insurance

Term and Permanent Life Insurance

Term life insurance covers a defined period. Permanent life insurance is designed for lifetime coverage while the policy remains in force and may build cash value.

4 min

Insurance 101 • 08

Term and permanent life insurance start with different timelines.

One is designed for a defined period. The other is designed to remain in force for life.

Term insurance is temporary coverage.

A term might last a set number of years or to a stated age, subject to the policy.

Permanent insurance can include

01Lifetime coverage while in force02Higher premiums in many cases03Cash value in many policies04Different policy structures05Long-term estate or financial uses

The main difference is the coverage promise.

01

Term life

Coverage for a defined period.

02

Permanent life

Coverage intended to last for life while the policy remains in effect.

A temporary need can still be long.

Mortgage need20 years
Children dependent15 years
Estate needPotentially lifelong
Product fitDepends on the need

Permanent does not mean the cash value equals the premiums paid.

Cash value depends on the policy and can be less than total premiums if the policy is cancelled.

Compare life policies using

01How long the need lasts02Premium cost03Death benefit04Renewal terms05Cash value features if any

Remember this

Match the coverage timeline to the financial need.

Term versus permanent makes sense only after you know what the policy is supposed to protect.

Lesson complete

Reviewed 2026-08-18

Sources

Financial Consumer Agency of CanadaLife insurance ↗
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