What type of insurance is typically less expensive than permanent insurance?

Term life insurance is considered less expensive than permanent insurance due to its fundamental structure and coverage duration.

Unlike permanent insurance products such as whole life and universal life, which provide coverage for the insured's entire lifetime and often include a cash value component, term life insurance is designed to provide protection for a specified period, typically ranging from one to thirty years. Because it does not build cash value and is only in effect for a limited time, the premiums for term life insurance are generally lower, making it a more affordable option for those seeking temporary coverage or who may have budget constraints.

The cost-effectiveness of term life insurance also makes it appealing for young families or individuals looking to achieve specific financial goals, such as covering educational expenses or paying off a mortgage, without the higher costs associated with permanent insurance. As coverage needs change over time, policyholders can reassess their insurance requirements and, if needed, explore permanent options later in life, possibly when they have more financial resources.