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Term vs. Permanent Life Insurance

Exploring Term vs. Permanent Life Insurance

As you shop around for life insurance, you may feel a bit confused about your options. When it comes to term vs. permanent life insurance, for example, you may be uncertain about which one is best for you. In order to compare term vs. permanent life insurance and to decide on which is right for you, it is important to understand what each has to offer and the pros and cons of each.

With term life insurance, your life insurance policy will only remain in effect for a predetermined amount of time. Although the most common terms offered by insurance companies are 5, 10, and 20 years, it may also be possible to get a policy that remains in effect for a shorter or longer period of time. You may also be able to obtain a term life insurance policy that will remain in effect until you reach a certain age.

Your other option is permanent life insurance. Permanent life insurance does not remain in place for a limited period of time. Rather, so long as you pay your insurance premiums, this insurance coverage will stay in place until you die. Therefore, you can be certain your beneficiary will receive a payment in the event of your death.

Since permanent life insurance remains in place for your entire life, the premiums for this insurance coverage are generally more than the premiums for term life insurance coverage. At the same time, your premium payments never go up with permanent life insurance. Therefore, in the long run, your payments may actually be less than what you would pay for term coverage. In addition, permanent life insurance has a savings component that term life insurance does not have. So, when comparing term vs. permanent life insurance coverage, you need to determine whether or not the savings component of permanent life insurance is important to you.