If you are currently shopping for life insurance then you have inevitably come to the part where you need to decide whether term life insurance of whole life insurance (permanent coverage) is right for you. You first need to decide how much life insurance you need, what your budget is, and whether you want coverage for the rest of your life, or for a specific term. Here are some of the difference between term life and permanent life insurance.
Price: Permanent life insurance costs more. In most cases, it’s a lot more. See below for reasons why it’s more expensive.
Coverage: Permanent life insurance is coverage that will last for your entire lifetime. Your premiums will never increase and your policy will never be canceled, as long as you continue to make your payments. Term life is insurance that lasts for a certain time period, or term, and then the policy will end or it can be renewed at the current (higher) rates.
Cash Value: Permanent life insurance costs more because a portion of your premium is set aside and invested. Over time, cash value builds up and grows on a tax-deferred basis. Term life insurance premiums pay for a death benefit only so there is no cash value.
I can comfortably say that term life insurance is adequate coverage 95% of the time. It is affordable and you can get more insurance coverage for your money. However, if you want permanent insurance coverage and you like the idea of “forced savings” then whole life insurance might be right for you. Make sure you know all of the ins and outs of your permanent life insurance policy because these policies can be complex and expensive. Get a free quote today and compare the difference in cost for whole life insurance and term life.
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