Most people start with term life insurance, and for many families that's the right choice. But permanent life insurance does things term can't, and for the right person it can be worth the higher cost. Here's how to think it through.

Term vs. permanent in one sentence each

• Term life covers you for a set number of years (often 10, 20, or 30) and pays only if you pass away during that time.
• Permanent life covers you for your whole life, as long as premiums are paid, and builds cash value along the way.

What permanent life insurance offers

• Lifelong protection. Your family receives a death benefit whenever you pass away, not just during a set term.
• Cash value. Part of each premium builds cash value that grows on a tax-deferred basis. You can borrow against it for needs like a business expense, college, or retirement income.
• Generally income-tax-free benefits. The death benefit is generally paid to beneficiaries income-tax-free. Policy loans are generally not taxed while the policy stays in force and is not a Modified Endowment Contract.
• Level premiums on whole life. Whole life premiums are set when you buy and do not increase. (Universal life policies work differently, and premiums can change.)
• Optional living benefits. Many policies offer riders that pay part of the benefit early for a chronic, critical, or terminal illness.

What to weigh

• Permanent coverage costs more than term for the same death benefit.
• Cash value builds slowly in the early years.
• Unpaid policy loans reduce the death benefit and can cause a policy to lapse.

So, is it worth it?

It often is if you want coverage that lasts your whole life, you've already covered the basics, and you'd value a long-term, protected place to build cash. It's often not if money is tight today — then term coverage protects your family for less. We'll help you compare both, side by side.

Guarantees are based on the claims-paying ability of the issuing insurance company. Hudson Agency does not provide tax or legal advice.