This is a general educational overview of the two main categories of life insurance. It does not recommend a specific type, insurer, or policy for you — that depends on your budget, health, and goals, and is worth discussing with a licensed insurance professional. The coverage amount our calculator estimates is independent of policy type; once you have a target dollar figure, this page can help you understand the two broad vehicles available to fund it.
Term life insurance covers you for a fixed period — commonly 10, 20, or 30 years — and pays a death benefit only if you pass away during that term. If the term ends and you're still alive, the coverage simply expires (unless you renew or convert it, often at a higher rate). Term policies are generally the least expensive way to get a large amount of coverage, which is why many of the coverage estimates on this site are framed in term-insurance dollar amounts.
Term insurance tends to fit well when your need for coverage is tied to a specific window of time — for example, until a mortgage is paid off, or until children are financially independent — because the term length can be matched to that window. Many term policies also include a conversion option, letting the policyholder switch some or all of the coverage to a permanent policy later without new medical underwriting, though the specific terms and deadlines for that option vary by insurer and policy.
Permanent life insurance (including whole life and universal life) is designed to last your entire lifetime as long as premiums are paid, and it typically builds a cash value component you may be able to borrow against or withdraw from. Because it combines lifelong coverage with a savings-like feature, permanent insurance generally costs significantly more per dollar of coverage than term insurance for the same person.
Permanent insurance is sometimes used for needs that don't have a clear end date — such as estate planning, leaving a legacy, or covering a dependent with lifelong care needs — rather than as the primary way to replace income for a working-age household. Whole life policies generally have fixed premiums and a guaranteed cash-value growth schedule, while universal life policies typically offer more flexibility in premium amounts and death benefit but can require closer monitoring to make sure the policy stays funded as intended.
| Coverage length | Term: fixed period | Permanent: lifetime |
| Typical cost | Term: lower | Permanent: higher |
| Cash value | Term: none | Permanent: yes, typically |
| Common use case | Term: income/mortgage replacement | Permanent: estate planning, lifelong needs |
| Premium over time | Term: level during the term, then expires or rises sharply | Permanent: generally level for life |
One way to approach the decision is to separate your coverage need into "temporary" and "permanent" pieces rather than treating it as a single all-or-nothing choice. A household with a 20-year mortgage and children who will be financially independent in 15 years has a coverage need that's almost entirely temporary, which tends to point toward term insurance sized to match those windows. A household with an estate-planning goal, a dependent with lifelong care needs, or a desire to leave a guaranteed legacy regardless of when death occurs has a need that doesn't have a natural expiration date, which is the scenario permanent insurance is generally built for. Many households end up using a combination: a larger term policy to cover the years of peak obligation, alongside a smaller permanent policy for a specific lifelong goal.
Many households use term insurance to cover the years when their financial obligations are highest (young children, an active mortgage) since it delivers the most coverage per dollar during that window. Others use permanent insurance for specific lifelong or estate-planning goals. The right mix depends on your budget, your goals, and factors this calculator doesn't know — like your health and how long you plan to keep the coverage — which is exactly why we recommend treating any online estimate as a starting point for a conversation with a licensed professional, not a final decision. Our calculator and DIME method guide can help you arrive at a coverage amount; this page is meant to help you think through how that amount might be funded, not to steer you toward either option.
Regardless of which category you're leaning toward, a few questions tend to matter more than the term-vs-permanent label itself: How long do you actually need the coverage to last? What would happen to the premium if you needed to renew term coverage after the initial period ends? If considering permanent insurance, how is the cash-value growth structured, and what fees or surrender charges apply if you needed to access it or cancel the policy early? A licensed insurance professional can walk through illustrations and policy specifics that this general overview intentionally does not cover, since those details vary by insurer and by the specific product being considered.