Needs change over time and flexible term insurance can mirror those changes. It acts as temporary insurance to meet your temporary needs. The necessity to provide protection for a family starts out high, but generally diminishes over time as children reach maturity and savings plans accumulate.

As the name reflects, term insurance provides coverage for a specific period of time, a term. At the end of the period, most policies may be renewed at an increased premium rate for the next period.

More buying power
Term insurance is designed to offer the largest amount of insurance protection at a relatively low cost. Because its cost is so reasonable, term is usually recommended for young families. It affords buying power for a larger amount of protection than permanent forms of insurance. For example a $100,000 Trust term policy costs a 35 year old about $200 a year, but the same $200 only buys about $14,000 of whole life Insurance because such policies combine savings and insurance

Not a compulsory form of savings
Unlike whole life Insurance, term has no forced savings element. It provides pure insurance protection, having no mission other than to pay a death benefit to the beneficiary.

Whole life insurance premiums remain constant for an insured’s entire life, but typically start out substantially higher than term rates. The rate charged on a whole life policy, at time of issue, is overly sufficient to cover the current risk of death. After commissions, the remaining premium is set-aside in a cash reserve. Over the years, this reserve generates interest to subsidize the premium, which alone is no longer sufficient to cover the mortality risk

After about 20 years, a $10,000 whole life policy will have a cash reserve of $6,000. The insurance company is only responsible to the beneficiary for the difference between the cash value and the face amount, $4,000. The need to increase the premium on the policy has been offset by the interest earnings of the cash reserve and the reduced amount the company actually has to pay -- allowing a level premium

Why purchase permanent insurance
A whole life insurance policy combines insurance protection and savings. While most policies produce a modest rate of return over time there are some instances where permanent forms of insurance are needed. For example, in the event one must provide funds to satisfy eventual estate taxes or for providing for a disabled child where a death benefit is necessary whenever death may occur, permanent insurance is indicated rather than term insurance.