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Term vs. Permanent Life Insurance: Which Policy Fits Your Needs?

May 10, 2023

Life Insurance Policy

Term vs. Permanent Life Insurance: Which Policy Fits Your Needs?

While you may agree that having a life insurance policy is essential when buying the right one, you may need clarification about the type of policy you must buy. Both term life insurance and permanent life insurance policies have their unique features, and depending on your specific needs, you may buy the policy that will be most beneficial for you. To make the selection process easier for you, this blog will provide you with a comparative analysis of both policies to enable you to make an informed decision.

Basic Differences Between Term and Permanent Life Insurance

The major differences between term life insurance and permanent life insurance are:

  • Term life insurance is for a fixed term that may extend up to thirty years, whereas permanent life insurance carries forward as long as you live provided, you pay the premiums regularly. While both offer a death benefit, for term life insurance, your beneficiaries will receive the death benefit if only you die within the stipulated period.
  • In addition to the death benefit, permanent life insurance offers its policyholders a cash value component.

Benefits of Term Life Insurance

Term life insurance is the preferred choice for many policyholders as it has several benefits. They are as follows:

Lower premiums

The term life premiums are more favorable if you are on a tight budget as the premiums are lower than permanent life insurance policies.

Good option for short-term goals

If you do not have the financial stability or resources to pay the relatively high premiums of the whole or universal life insurance, buying a term life for a specific period provides you with the required coverage.

Higher flexibility

You can decide the period of coverage according to your needs. Also, its convertibility feature allows you to convert it into permanent life insurance. However, there may be time limits for the conversion element.

Simplified life insurance option

It’s an easy-to-understand coverage where you are covered for a term. If you die, your family gets compensation and if you don’t, the coverage expires.

Drawbacks of Term Life Insurance

However, before buying term life insurance, you must know of its disadvantages too.

  • The coverage expires along with the term.
  • Your family gets the death benefit only if your demise occurs within the term.
  • While having a term life, if you develop serious health issues, you may find it difficult to get life insurance once its term expires.

Benefits of Permanent Life Insurance

Permanent life insurance is considered the better long-term solution due to its multiple benefits. They are:

Guaranteed insurance for life

Once your insurance is approved, it cannot be canceled on any other grounds including health issues, except for your inability to pay the premiums.

Assured death benefit

Your beneficiaries are guaranteed a lumpsum called the death benefit on your death which, in most cases, is tax-free.

Cash value component

A cash value builds over time which you may withdraw during your lifetime for any financial emergency.

Stay Protected with Fuller Insurance Agency!

For more information on life insurance policies, contact our team today. At Fuller Insurance Agency, we help you select the right life insurance policy type based on your unique needs and budget.

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