How Much Cheaper is Term Life Insurance than Permanent Life Insurance?
Term life insurance is a type of life insurance that is most like other forms of insurance, such as auto and home. That’s because with term life insurance, you are not building up any value in the policy. For example, with auto insurance, you pay your monthly premium and your car is covered in case there’s an accident, or if it’s stolen. However, you can walk away from your auto insurance and the auto insurance company is not expected to pay you back any of your premiums – you were basically paying for a service, and now you’re not. The insurance company doesn’t owe you anything in return in the same way a housekeeper wouldn’t owe you anything should you no longer require his or her services. So term life insurance is comparable to auto insurance in that way, whereas whole or permanent life insurance behaves more like an investment vehicle that you pay into and later get money from. Because of this purely risk-based nature, term life insurance is much, much cheaper than whole or permanent life insurance.
Let’s say you’re a 43 year old male. You’re healthy and you don’t engage in any particularly risky activities. You decide to get term life insurance because it’s more affordable. Why is it more affordable? Because since it has an end date, there’s a very good chance that the insurance company will never have to pay out any benefits, whereas a whole life insurance policy, by definition, must pay out. So whole or permanent life insurance policies make you pay more because they know they’re going to have to pay benefits at some point. A term life insurance policy is cheaper because it’s not likely that a policy holder is going to pass away within specified term limit.
To learn more about term life insurance, whole life insurance, permanent life insurance, and other kinds of insurance, be sure to speak to a financial advisor. You need professional guidance before you commit to an expensive financial relationship. Go Insurance Rates can provide you with free life insurance quotes in case you wanted to see the best current rates – the process only takes a few seconds, and is completely secure.