Compare Life Insurance: Permanent vs. Term

Is buying life insurance on your mind, yet youre not sure how to choose between permanent and term? Everyone is faced with having to compare coverage before making a decision. If this is you, it’s good to know that it doesn’t have to be a difficult choice especially if you are given some great basic details about each type of coverage.

What is Permanent Life Insurance?

Permanent life insurance is a unique form of coverage because it offers more than financial protection for your loved ones upon your death. It also incorporates a savings component that works as an investment. In other words, you can include money market securities, bonds, mutual funds, or even a fixed interest rate to your policy so that while you’re investing in the predetermined coverage amount, you’re also investing in additional money for your loved ones.

When you compare coverage, it’s good to keep in mind that a permanent policy will usually cost more because of these added features, along with the fact that you can borrow against its cash value. Also, it’s good to know that there are two common types: whole and universal. Whole provides lifetime protection and offers a predetermined premium that combines your death benefit and investment, while universal separates the two, which makes your cash value accumulate quicker.

What is Term Life Insurance?

Term life insurance is different than permanent life insurance in that it pays a predetermined sum if the person carrying the policy dies during a specified period of time. When the insured dies, the insurance coverage will pay the face value of the policy to the person named as the beneficiary. In this type of policy, it may last for only one year, or more than 30 years; however, if it isnt renewed, the coverage will end and the policy will terminate once it expires.

When you compare coverage, remember that since this form of coverage is temporary, it is usually cheaper. However, there is no investment component, so if this is important to you then you might want to revert back to the permanent policy for your life insurance.

Choosing between permanent and term may seem a little tricky at first, but it’s just a matter of looking closely at your needs when you compare life insurance coverage. After you’ve reviewed what’s best for your family, you can then choose the perfect policy.

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