12 Nov Term vs Permanent Life Insurance
Buying life insurance is a major decision. Before you jump head first into a purchase, be sure to do your homework. Enlist the advice from an insurance specialist to learn the differences between term and permanent insurance, and learn what will best suit your needs.
In the meantime, here is the skinny. Below are some key distinctions between term and permanent life insurance as you navigate your insurance needs.
Term insurance provides coverage in the event that you die during the term of your policy. Term insurance is often used by younger clients who have families, mortgages and other financial responsibilities. At the end of the term; however, unless the policy is renewed, there will be no monies issued to the beneficiary, should a death occur. Upon renewal, you can expect your premiums to increase and that you may be asked to complete a medical exam.
When purchased at a younger age, the premiums for term insurance start out affordable, but when the terms ends, and renewal is required, premiums often increase. As we age, and renew terms multiple times, the premiums become very costly and for some, unaffordable.
Permanent Insurance, on the other hand, provides coverage for life. In terms of the premiums, the reverse is often true. The premiums start out higher than term insurance, but later in life, tend to be lower than the renewable term insurance premiums.
Within permanent insurance, you can choose between Whole Life Insurance and Universal Life Insurance. Whole life insurance guarantees the amount of your premiums, will not increase as you age, will often have a minimum cash value and the amount paid out at your death is guaranteed. Universal is similar; however, a portion of your premiums are allocated to both insurance and investments. Flexibility in premium amounts, how the premiums are invested and cash value are attractive features of universal life insurance.
As you can see, insurance is not a one size fits all. Major events in life prompt us to reconsider our insurance needs, so the needs that you had when you were 30 may be vastly different as you head into your 60’s. Events such as marriage, babies, home purchases, retirement and death, to name a few, can have a major impact on which insurance product you decide to purchase.
Have you evaluated your insurance needs lately?
Contact our Case Management team to connect you with an insurance specialist.