Term vs. Permanent Life Insurance: What a Coverage Estimate Doesn't Decide
Why a coverage amount estimate like DIME doesn't tell you which type of life insurance to buy, and how term and permanent policies differ.
A DIME-style calculator answers "how much coverage," not "what kind of policy." Those are two separate decisions, and conflating them is a common source of confusion when shopping for life insurance.
Term life insurance
- Covers a fixed period — commonly 10, 20, or 30 years.
- Generally the lowest-cost way to insure a temporary need, like a mortgage or the years until children are financially independent.
- Pays a death benefit only if you die during the term; it has no cash value if you outlive it.
Permanent (whole/universal) life insurance
- Covers your entire life as long as premiums are paid, and builds cash value over time.
- Costs significantly more per dollar of coverage than term insurance.
- Suits different goals — estate planning, a permanent dependent, or supplemental savings — rather than a temporary income-replacement need.
Matching the coverage amount to the right term length
Most DIME-style needs — replacing income for a set number of years, paying off a mortgage on its current schedule, funding education before children finish school — are temporary by nature, which is why term insurance is the common match for a DIME-based coverage estimate. Run your numbers in the Life Insurance Needs Calculator to get a coverage target, then discuss term length and policy type with a licensed agent based on your specific timeline.