Term Or Permanent: Which Life Insurance Is Right For You?

13 October 2022 by Elijah Steward

Are you in the market for life insurance? Life insurance is an effective way to protect your loved ones after your death. If you have people who are financially dependent on you, life insurance can help them cover important bills after your death. They can use the death benefit to pay off debts, fund important goals like college or retirement, or simply to replace the loss of their income.

There are many types of life insurance policies available, but they broadly fall into two categories: term and permanent. Both can be useful in the right situations. However, it's important to choose the right type for your needs and budget. Below are descriptions of each type and how they can best be used.

Term Insurance

As the name suggests, term insurance is coverage that lasts for a defined term. That term is usually a set number of years, like 10, 15, or even 30 years. You pay a flat premium amount. If you pass away during the term, your family receives the death benefit amount. If you don't pass away during the term, you have a few options when the term expires. You can let the policy lapse and stop paying premiums. You can also renew the policy, but at a new premium amount that reflects your current age. Or you can convert the term policy into a permanent policy with a new premium amount.

Term policies are best used in situations where your need for life insurance is temporary. For example, perhaps you want life insurance so your spouse can pay off the mortgage if you pass away. Or maybe you want protection when you have young children in the home, but you don't need it when they're grown. 

Term insurance can also be useful if you are on a tight budget. Because term policies are temporary, they are usually priced lower than permanent policies. You can start with term now and then convert it to permanent later when your budget allows more premium.

Permanent Insurance

Permanent insurance is insurance that is in effect your entire life, assuming you make the premium payments. No matter what age you pass away, your beneficiaries will receive the death benefit.

Permanent insurance is a good option when you have a life insurance need that will always be in place. For instance, perhaps you want your kids to receive money when you pass away, no matter their age. Or maybe you want to leave money for a charitable cause. If the need is permanent, and your budget allows for a higher premium, you may want to choose a permanent policy.

Contact a life insurance agent in your area today for more information. They can help you find the right policy for your needs and budget.  

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