Many individuals take out a life insurance policy to provide for their family's financial wellness in the event that something happens to them. Two popular life insurance options are term life insurance and permanent life insurance. What are the differences between these two selections?
Term Life Insurance vs Permanent Life Insurance
Term life insurance refers to an insurance plan in which you pay for coverage over a certain time period, or "term." For example, term life insurance plans may cover five, 10, or 20 years. On the other hand, permanent life insurance (sometimes referred to as "whole life insurance") offers coverage for the rest of your life.
Here are some other key differences between these two options:
- Term life insurance tends to be significantly less expensive than permanent life insurance.
- Term life insurance only provides benefits at death, whereas permanent life insurance policies usually include a cash value accumulation over the course of coverage. In many cases, you can withdraw some of this accumulated cash early.
- You typically have to take a medical exam in order to qualify for permanent life insurance. However, many term policies do not require this.
- Term life insurance plans offer you a choice as to how long you want coverage. Permanent life insurance is, as the name implies, permanent - you must pay the premiums for the rest of your life.
- Term life insurance policies are less complex and easier to understand than permanent insurance plans.
Talk to a NAIFA Financial Services Professional Today
Term and permanent life insurance policies each have their own unique advantages and drawbacks. The best option for you depends on a number of factors, such as your financial status and goals, your current and projected health, and the needs of your family. If you'd like to learn more about term and permanent life insurance, reach out to one of our friendly financial services professionals at NAIFA today.