Term Life or Permanent Life Insurance – What’s the Difference?

There’s no question you want to protect what’s precious to you. But often, people struggle to understand the difference between term or permanent insurance. Here are some factors to consider:

• Cost – What you pay for the protection.
• Time – How long you will be insured.
• Face Value – How much money your beneficiaries receive upon your death.
• Cash Value – How much money can be received by withdrawing, borrowing or cashing in the policy.

It may be that the best solution for you is a combination of the two types using term insurance to protect for short-term expenses and permanent insurance policy for long-term concerns. 

 

Term Life Insurance		Permanent Life Insurance
Least expensive life insurance protection since there is no “cash value” component. Best for filling a temporary obligation, i.e. mortgage, supporting children until they can become financially independent, college tuition, etc. Available in 5, 10, 15, 20 or 30 year "terms". Get protection for exactly the time you need. Level premiums guaranteed not to increase during term. Generally flexible payment schedule monthly, quarterly, semi-annual or annual. Can’t be cancelled as long as you pay your premiums. Pays a death benefit to your beneficiaries, which is generally income tax free.		Doesn’t expire and offers lifetime protection. Can build tax-deferred cash value depending on how you set up your policy. Pays a death benefit to your beneficiaries, which is generally income tax free. Ability to access cash value either through withdrawals or loans to help with education, emergencies or as retirement income supplement. Can cancel at anytime and receive the current cash Option of choosing a “universal life” policy which can provide additional flexibility allowing you to make withdrawals or skip payments as long as the cash value of your account is sufficient to cover the insurance costs.

 

 

Term Life or Permanent Life Insurance – What’s the Difference?

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