Term or Permanent Life Insurance, Which is Better?

If you’ve decided that you definitely need life insurance, congratulations. You’ve made the first step toward an important decision that will protect your loved ones.

But of course, deciding that you need this protection is only the first step. Now you will face a series of choices related to the type of life insurance policy that is right for you. First up will be the choice between term or permanent life insurance.

Term insurance offers coverage for a specified period of time only. For example, you could purchase a twenty-year term policy. If you pass away during that twenty years, your death benefits would be paid to your designated beneficiary. If your policy is not used during the term period, you will need to convert to a permanent policy or extend the term before it expires.

A permanent (also called whole life) policy is exactly what it sounds like. There is no “end date”, as with term life insurance, so your benefits are available as long as you continue making premium payments on time. A portion of your permanent life insurance premiums can go into a cash-value account, if you choose a policy that allows this option. You might be able to borrow against the value of this account during your lifetime, to cover expenses such as high medical bills, college tuition, or other emergencies.

Premiums for either type of life insurance policy will be based on factors such as age, health, and the amount of insurance purchased. Term life insurance policies usually offer much lower premiums than permanent policies, often making them attractive to younger people. By contrast, the premiums paid for a permanent life insurance policy usually remain level for the rest of your life.

These are just two types of life insurance; once you begin comparing permanent policies, you will find that there are even more subtypes of policy. As you can see, seeking expert guidance can be key to identifying a policy that is best suited to your unique needs. Since life insurance is such an important purchase, don’t leave the decision up to chance. Give us a call and we’ll help you understand the many options available to you, so you can enroll in the policy that offers the best protection for your loved ones.