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Melissa Carroll

What Is The Difference Between Term & Permanent Life Insurance?

For a younger person, life insurance is one of those policies that you hope you never have to use but is incredibly important to protecting the well-being of your family in the event of an untimely death. As you age, it can become more of a way to address major taxation concerns, final expenses, or perhaps to leave a desired legacy for your family. Either way, life insurance is an important piece of your financial puzzle that is best taken care of at an early age. Below, we’ll walk you through the difference between term and permanent life insurance, and the advantages/disadvantages to both.

 

What Is Permanent Insurance?

Permanent insurance, which includes “whole life” and “universal life”, is designed for lifelong financial protection - as long as the policy's in force. It also includes a savings component that allows you to grow tax sheltered cash value inside the policy, which you can use to borrow against, or buy more insurance if you prefer.

 

What Is Term Insurance?

Term insurance is a form of life insurance that is purchased in increments of time. For example, you can purchase the coverage in a term of 10, 20, 30 years etc. Unlike permanent insurance, a term policy will not accumulate cash value.

 

What Are The Premiums Like?

Permanent insurance will have a higher premium than term life insurance. However, the premiums on a permanent policy will remain level and never increase. It’s recommended that you secure a permanent policy at a younger age as the premium will be significantly cheaper than if you wait until you’re older.

In comparison to permanent life, term life insurance can be very affordable because each term is a shorter period of time. Your premiums will remain the same for the duration of the term but will increase at the end of each term.  Some term insurance policies will allow you to convert your policy to a permanent one with no medical questions asked – another strategy sometimes worth considering.

 

What Is The Best Option For Me?

Determining how to best protect your family with the right life insurance solution for you will depend on a number of different factors. Based on your age, family status, health and financial situation. But most importantly, consider your goals and how you want this investment to work for you!

It’s important to reiterate that no matter what, life insurance will never be cheaper than it is today. The younger you can secure a life insurance policy, the better the cost will be.  The best time to plant a tree was 20 years ago. The second best time, is today.

Melissa Carroll

Melissa has over 17 years of experience in the insurance industry working in administration, and became licensed in 2008. She is responsible for all aspects of individual insurance for HMA, and is LLQP (Life License Qualification Program) certified. Melissa also enjoys travelling when possible, and has future plans to buy a home in the Caribbean.
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