Term vs. Permanent Life Insurance: A Broker's Honest Framework
If you have spent five minutes researching life insurance online, you have already seen the fight: 'buy term and invest the difference' on one side, 'permanent is the only real coverage' on the other. Both camps are selling something. The honest answer is that term and permanent insurance solve different problems, and most families benefit from owning some of each at different points in life.
What term insurance actually does
A term policy is income replacement. You pay a relatively small premium for a fixed period — typically 10, 20, or 30 years — and if you die during that period, your family receives a lump sum tax-free. The job of term insurance is to make sure the mortgage gets paid, the kids get through college, and your spouse is not forced into financial triage if you are no longer around.
What permanent insurance actually does
Permanent insurance — whole life, universal life, IUL — is designed to be in force whenever you die, not just during a window. It also accumulates cash value that grows tax-deferred, can be accessed through policy loans, and passes outside of probate. It is more expensive per dollar of death benefit because the carrier knows it will eventually pay a claim.
How we actually structure coverage
- Stack a large 20- or 30-year term policy to cover your highest-liability years
- Layer a smaller permanent policy underneath to guarantee a legacy benefit
- Revisit the structure every three to five years as income, debts, and dependents change
- Convert portions of term to permanent before health changes price you out
The mistake we see most often is families who bought one product a decade ago, never looked at it again, and have either too little coverage during their peak earning years or too much premium going toward a product that no longer fits. A fifteen-minute call usually tells us which one you are.
