If anyone other than yourself relies on your income, then you should absolutely look into a life insurance policy to cover them in your absence. Calculating your life insurance policy’s death benefit should always be done with an insurance professional or financial planner to really see the long-term impact that a premium can have. Beyond death benefit, there are different options available alongside a life insurance policy that can influence the price and type of insurance provided; the two major types of life insurance are called term and permanent.
Term and Permanent Life Insurance
Term Life Basics
When you hear the phrase “term” in reference to life insurance, you can take that to mean temporary. That isn’t to say that temporary life insurance is a bad thing, in fact it has a great many strengths; instead, you should view term life insurance as insurance to guarantee your loved ones are provided for through a specific time period. For instance, if you have small children that you want to ensure are supported throughout their childhood, then a 20 year term life insurance policy more than achieves that goal; should anything happen to you in this time, your family would receive the premium, but the benefit does not extend beyond when it is actually needed.
Permanent Life Basics
Permanent life insurance, as it sounds, is coverage designed to insure the policy owner throughout their life. While that sounds simple enough, the insurance is actually more than simply a “forever” term life insurance plan, as permanent life insurance plans also have a savings component to them. When you pay your permanent life insurance premium, a portion of the premium will be deposited into a high-yield savings account, mutual fund, or other investment. Additionally, unlike term insurance, permanent life insurance comes in two main types: Universal and whole life insurance.
Universal Life Insurance
This type of permanent life insurance gives the policyholder flexibility throughout the plan, as they can typically adjust death benefit and savings components upwards and downwards to change premiums throughout their life.
Whole Life Insurance
This type of permanent life insurance is designed for more stability, providing a consistent premium and often a guaranteed cash value accumulation on the savings component.
Comparing Term and Permanent
When we look at term vs permanent life insurance (of either type), the largest thing to consider is your financial goals and situation. If you feel that you have a good grasp on your savings future and your ability to invest your money, then you should probably opt for term life insurance to see your family through a specific period of time; on the other hand, if you’re looking for long-term stability or a slight guaranteed investment, permanent insurance can be a good option. Term life insurance boasts far lower premiums for the same death benefit, often as low as 15 dollars a month; permanent life insurance, on the other hand, costs considerably more because of the savings and investment element.
Get Expert Help
Don’t navigate life insurance alone, contact AmeriQuote Insurance in Fort Collins for expert help; our insurance professionals will lay out numerous life insurance companies and policies for you to choose from, allowing you to pay exactly what you want for what you need.