19 Aug Term vs. Permanent Life Insurance: Which is Right for You?
Term vs. Permanent Life Insurance
Choosing between term and permanent life insurance is one of the most important decisions you’ll make when it comes to protecting your family’s future. Each type has its own set of benefits, and understanding the differences can help you select the right policy for your needs (Term vs. Permanent Life Insurance: Which is Right for You?).
Term life insurance provides coverage for a specific period, typically 10, 20, or 30 years. It’s often more affordable, making it an attractive option for young families or those with a temporary need, such as covering a mortgage or income replacement during working years. However, once the term expires, so does the coverage, unless you renew or convert the policy.
Permanent life insurance, on the other hand, offers lifelong coverage as long as premiums are paid. This type includes whole life, universal life, and variable life insurance. In addition to the death benefit, permanent policies accumulate cash value over time, which you can borrow against or withdraw. The cash value component can serve as a financial asset, growing tax-deferred.
Key Considerations:
- Budget: Term insurance is less expensive, but permanent insurance offers more benefits.
- Coverage Needs: Consider your long-term financial obligations, like estate planning or lifelong income replacement.
- Flexibility: Permanent policies provide flexibility through cash value accumulation and the ability to adjust coverage or premiums.
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