Term life and permanent life insurance are both types of life insurance policies that can benefit many people. However, before you make the final decision on which policy would work best for you and your loved ones, you need to review each option.
That’s why we’re here to explain the basics of term life and permanent life insurance so you have an understanding of which policy may fit your needs best.
What is Term Life Insurance?
A term life insurance policy offers life insurance for a specific period. This means the policy can last for 10, 20, or even 30 years, depending on the preference of the policyholder. And, just like other life insurance policies, term life comes with a death benefit. However, unless the policyholder passes within the period of the policy, the beneficiaries will not get the death benefit.
Now, if you have a term life policy and let it live out its term, you have the choice to let it expire, renew it for another period, or convert it to a permanent life insurance policy.
Permanent Life Insurance
As the name implies, permanent life insurance is a form of life insurance that lasts for the policyholder’s life. As long as you pay your premiums, the insurer will pay a guaranteed death benefit to the specified beneficiaries regardless of when you pass away. However, there is a feature that usually comes with most permanent life insurance policies. This is known as the cash value. You can typically borrow against this cash value.
There are also several permanent life policies, whole as whole life or universal life insurance.
Term Life vs. Permanent Life Insurance
There are some basic differences between term life and permanent insurance. First, term life policies have an expiration date, while permanent life policies do not. If you keep paying your premiums, the policy will remain active. At the same time, term life policies cost less than permanent life policies.
However, one of the greatest features of these policies is that both have death benefits. These benefits will be issued after the policyholder dies and will ultimately help the family pay for funeral expenses, medical bills, and other costs, depending on the amount of the benefit. Typically, a term life policy will have a smaller death benefit than a permanent policy.
To learn more about life insurance policies, don’t hesitate to reach out to us. We understand the importance of life insurance and work to ensure all our clients are enrolled in the right policy for them.