Term vs Permanent Life Insurance: Which Fits Your Goals?
If you’re thinking about life insurance, you’ve probably come across two main types: term and permanent. One gives you simple, temporary protection. The other offers lifelong coverage and builds value over time. The right choice depends on your goals, budget, and current life situation.
Term Life Insurance
Term life insurance covers you for a specific period, such as 10, 20, or 30 years. It’s usually the most affordable type of coverage and easy to understand. Many people use it to protect a mortgage, provide income while raising kids, or cover other short-term financial responsibilities.
For younger Canadians, term life is especially appealing because you can lock in low premiums while you’re healthy. That means even if your health changes in the future, your rate stays the same for the length of the term. Some policies also give you the option to convert to permanent insurance later on without having to take another medical exam.
Permanent Life Insurance
Permanent life insurance lasts your entire life as long as premiums are paid. It also includes a savings component—cash value—that grows over time. This cash value can be used while you’re alive: you can withdraw from it or borrow against it if you need money for emergencies, education, or other goals. The amount you access may reduce the death benefit, but it gives you financial flexibility.
This type of insurance is more expensive than term, but it offers more than just a death benefit. Permanent coverage can play a role in estate planning, provide funds for final expenses, or allow you to leave a financial legacy. For people who want lifelong protection and additional financial flexibility, permanent life can be a strong option.
Quick Comparison
| Coverage | Fixed term (e.g., 10–30 years) | Lifetime |
| Cost | Lower for young and healthy people | Higher premiums, fixed for life |
| Savings Value | None | Builds cash value you can borrow or withdraw |
| Best Use | Temporary needs like mortgage or child care | Estate planning, lifelong protection, savings |
Why Younger Canadians Should Care
It’s easy to think life insurance is something you don’t need until later in life, but buying coverage when you’re younger has real advantages. Premiums are lowest when you’re healthy, and once you have a policy in place, those premiums stay locked in. Even a short-term policy can cover expenses such as student loans, co-signed debts, or funeral costs.
Choosing permanent insurance while young also gives your policy’s cash value more time to grow, which can provide financial flexibility later. Whether it’s helping with retirement planning, supporting a business, or leaving something behind for family, starting early sets a strong foundation.
How to Decide
Think about what you want your insurance to do for you. Is your main goal to cover a mortgage or income while raising a family? Or do you want something that builds value and supports long-term planning?
For many people, the best answer is a combination—using affordable term coverage for immediate needs and adding permanent coverage later for lifelong goals.
Closing Thought
There’s no one-size-fits-all answer. Term life is simple and affordable for your early years. Permanent life costs more but offers lifelong protection and flexibility. Deciding early helps you lock in low premiums and secure your future. Speak to an advisor to learn which fits you best.
