Written by John on February 17, 2012 – 5:29 pm
What are the different types of life insurance? There are mainly two types of life insurance –term life insurance and permanent life insurance. Term life insurance would only have you covered for a specific period of time, and this type of insurance will only pay out if you die during the period in which you are covered. Depending on the company you have chosen, term insurance policies may or may not be renewed, but it would also be dependent on the specific policy you have chosen — these policies may last as short as a year or a good three decades even! You get protection for life with permanent insurance. As long as you pay the premiums, the death benefit will be paid. These policies are designed and priced for you to keep over a long period of time. Permanent policies can be subdivided into whole, ordinary, universal, adjustable and variable life insurance.
So what are the pros and cons of term and permanent insurance, and what do they mean to you? Now you may not know when the Lord will take you, but you would definitely want to know which type of insurance is best, so read the list below and feed your head with information.
Term Life Insurance
Pros
Initial premiums are generally lower (i.e. cheaper) than for permanent insurance, which in turn allows you to buy the higher levels of coverage at a younger age, which is often when a good policy is most needed.
It’s good for covering needs that will disappear with age, such as student loans, car loans, and mortgages.
Cons
Over time, your premiums would increase.
Coverage may terminate at the end of the term, or simply become too expensive to continue.
Permanent Insurance
Pros
So long as you’re paying on time, all the time, you have this coverage guaranteed for your entire lifetime.
The policy accumulates a cash value against which you can borrow. (Note: there are some technicalities with that, so make sure to discuss all possible issues with your insurance company before taking this route). The cash value can be used in two primary ways, either to pay premiums or to provide fully paid insurance.
A Provision or “rider” can be added to a policy that gives you the option to purchase additional insurance without taking a medical exam or having to furnish evidence of insurability.
Cons
The premium levels may make it extremely difficult to get the protection you need.
If the Grim Reaper decides on your behalf that you won’t be holding on to your insurance for long, it might be more expensive than term insurance.
As is the case with other technical endeavors, you should give pause to several other factors before you come up with your conclusion, but this simple article should be enough for you to get started on the research process, the process that will ultimately help you decide on the best type of insurance for you and/or your family.
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