Choosing Between Term-Life and Permanent Life Insurance | Life Insurance Agent
by Chuck on Dec 13, 2013
If others depend on you for financial support, part of your financial plan should include how you will provide for them in the event of your death. Purchasing a life insurance policy is a safety net that ensures your loved ones’ future financial obligations are met, covering items such as funeral costs, outstanding debt, estate taxes and everyday living expenses.
If you are married, it’s important for both spouses to have a life insurance policy. If both people bring in an income, a death can be a difficult financial loss. Also, if a stay-at-home parent should pass away, expenses such as childcare and other domestic items can create financial hardship, too.
There are two basic types offered by life insurance agents: term life insurance and permanent life insurance. The type of life insurance policy that best suits you will depend on your unique needs. To help you decide, we’ve covered the basics.
Option 1 – Term Life Insurance
Just as its name implies, term life insurance covers you for a specific period of time, or term, that you choose. Term Life offers a death benefit but no cash value, so it is an inexpensive way to protect your beneficiaries for a specified period of time.
Term Life is ideal for those who have a temporary need for life insurance protection, for those who need a large amount of insurance protection but have limited cash or for those with specific business needs – such as additional coverage for a key employee.
Renewal term life insurance can be renewed at the end of the term, at the option of the policyholder and without evidence of insurability, for a limited number of successive terms. It can also be converted, or exchanged for a permanent insurance policy, without evidence of insurability down the road.
With term life insurance, once the term expires, your coverage ceases and the policy has no further value. Most life insurance agents know that it’s important to advise that rates generally increase along with the insured’s age.
Option #2 – Permanent Life Insurance
Permanent life insurance is any form of life insurance other than term. Examples are whole life, universal life and variable life. These policies combine term life insurance with a long-term, tax-sheltered savings plan.
Whole life is the most basic type of permanent life insurance. It provides coverage that lasts a lifetime and also builds up a cash value that you can borrow against, withdraw or use to pay future premiums.
A life insurance policy with a cash value is ideal for those who have a lifetime need for insurance protection, prefer stable premiums over the life of the policy or want a policy that allows them to build tax-deferred values and value the high degree of coverage the policy affords.
Because rates for a whole life insurance policy remain stable over the life of the policy, premiums are initially more costly than for term insurance.
Regardless of whether you choose a term or permanent policy from your life insurance agent both can give you protection and peace of mind knowing you have coverage when you need it most. Call us today at (727) 544-8841 to learn more.
Disclaimer: This information is provided for informational purposes only. The information provided herein is not intended to be exhaustive, nor should it be construed as advice regarding coverage. Eligibility for coverage is not guaranteed and all coverages are limited to the terms and conditions contained in the applicable policy.