Term vs. Permanent Life Insurance for Educators
So you need life insurance, but you’re unaware of the difference between permanent vs. term life insurance policies? If you are struggling to decide which life insurance policy is best for you, this article will help you better understand term and permanent life insurance policies.
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If you’re buying life insurance, first, you must know there are two kinds: Term and Permanent.
What is Term Life Insurance?
Term life insurance lasts only for a certain period; after that, it becomes useless, and the insurance company does not cover your losses. It usually lasts for 10-30 years and is ideal for people who do not want an expensive life insurance policy. But in term life insurance, you will only get limited coverage, and your beneficiary will only be paid if you die during the term policy date. But if you die after completing the term insurance policy, your coverage will lapse, and unfortunately, nothing will be covered by the term life policy.
When you buy Term Life, you are purchasing life insurance for a set period. For example, if you are 30 years old and want to insure yourself until you are 60, you’ll buy a 30-year term policy.
A term policy will keep the premiums the same throughout the 30-years, but once you reach 60, that insurance will go away (or get a lot more expensive). So term life insurance is less costly and is a straightforward kind of life insurance policy.
What is Permanent Life Insurance?
Unlike term life insurance, permanent life insurance does not last for a specific period. Instead, permanent life insurance is an umbrella term used for life insurance policies that doesn’t expire.
So whether you live for a day or a decade after purchasing the policy, you will benefit from your permanent life policy, and your beneficiaries will get financial help immediately after your death. Also, you don’t have to worry about your debts, as permanent life insurance will cover them.
Permanent Life insurance
Permanent life insurance comes in various forms – Whole Life, Universal Life, and Variable Universal Life. These are variations of a life insurance policy with a savings account (“cash value”) attached. For example, whole life policies have a fixed amount of growth to the cash value (i.e., 4%).
Universal Life Insurance
Universal insurance can assign this savings or cash value to a stock market index, so it has the potential to grow faster or do a fixed rate of return. It also provides a lower premium than the whole life.
Variable Universal Life
Variable universal life allows you to invest money in the stock market through mutual funds to build up cash value.
After reading the differences between term life and permanent life insurance, you might be confused about which insurance policy would be best for you and your family.
Here are some of the pros and cons of both of these policies that could ease your purchasing choices.
Pros and Cons: Term vs. Permanent Life Insurance
- Term insurance policy is much affordable with fewer restrictions than the whole insurance. For example, in term insurance, the policy expires at the end of the term, and then you have to buy a new policy if you want. Also, you don’t have to pay high fees in the term insurance, and you have the chance to cancel the policy anytime.
- Whereas permanent life insurance is much more expensive, and that’s the reason why some do not choose whole life insurance. Due to high premiums, many people even surrender in the middle. But whole life insurance gives you lifetime coverage and helps you deal with high mortgages and debts.
Are you still confused about which insurance policy would be ideal for you and your family?
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Our experts will patiently listen to your needs and guide you in purchasing the BEST and most AFFORDABLE life insurance policy that matches your situation.
These policies can get confusing very quickly, and there seems to be a limitless amount of riders (additional benefits) that you can add to these policies.
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