Choosing a life insurance plan is difficult; it takes a lot of time and
research in order to ensure that all aspects are thoroughly examined before
making a final decision. There are basically two forms of life insurance to
choose from: term life insurance and permanent life insurance.
Below you will find valuable information regarding both forms of life
insurance as well as other helpful information which will assist you in deciding
which form of life insurance is best suited for you and your situation.
The first thing to do is to research and understand the concept of both
forms of life insurance. These two forms of insurance have been
compared to buying or leasing a car. Term life insurance is much like leasing a
car, you can purchase insurance for a specific number of years, but once those
years are up, so is your insurance coverage. Permanent life insurance is similar
to buying a car. When you buy a car, it’s yours and you can drive it forever if
you like. Permanent life insurance stays with you until you die.
Depending on your situation, each form of insurance can be very
beneficial and offer many great opportunities. Below you will find a more
in-depth explanation of each form of insurance providing advantages and
disadvantages of both.
Term Life Insurance
Benefits
•Term
life insurance is inexpensive and can cost a considerable amount less than
permanent life insurance.
•There are no strings attached with this form of
insurance and you are free to stop paying whenever you want.
•You can begin
using term insurance and if you feel like you want more coverage, you can then
convert to permanent life insurance if you wish.
Downfalls
•Term life
insurance only provides coverage. There are no other rewards and there is no
cash value.
•Yes you are free to stop paying whenever you please, but should
you choose to do so you will no longer have any life insurance
coverage.
•Term prices increase at a rapid pace as you get older and as you
get older, your need for this type of insurance will become more and more
crucial.
Permanent Life Insurance
Benefits
•Permanent life
insurance can accumulate into cash value and savings. Any cash value which you
receive will be tax deferred.
•There is no risk involved in this form of
insurance. Your loved ones will receive a death benefit regardless of when you
pass away, whereas term life insurance will only pay out if you happen to be
covered when you die.
•You can borrow the cash value you receive to pay for
college, a vehicle, etc. You can do this without receiving a penalty for doing
so.
Downfalls
•The most noticeable disadvantage to permanent life
insurance is the cost. This form of life insurance will cost you a great deal
more than term life insurance.
•Should you decide to forgo your permanent
life insurance coverage, you will be required to pay a large penalty which will
be bounded by law.
About the Author
Bill Mason
is a retired insurance agent who now writes as a freelance writer
for http://www.insuranceguide101.com – a site that offers information on auto insurance, pet
insurance, boat insurance and more.
