If you think life insurance is as confusing as a Rubix cube, we can’t argue that it takes some time to wrap your head around it. Fortunately, we’re here to help simplify things so you can better grasp which life insurance product better suits your unique needs.
Both products have one commonality: they serve to protect your beneficiaries by offering them a death benefit financial payout to support them even when you’re not here. So with that in mind, let’s explore the benefits and differences between term life insurance and permanent life insurance.
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As the name suggests, term life insurance is a short-term product that you purchase for a specific allotment of time (10, 20 or 30 years). How short-term coverage works is if you pass away while the policy is active then your beneficiaries will receive the death benefit payout, otherwise, the policy remains until it reaches the end of the term.
Some of the main components of term life insurance are:
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What makes permanent life insurance such an attractive life insurance to prospective applicants is that it offers whole life protection, which means you only have to set up your plan once as your plan never expires. Another reason why permanent life insurance is a popular choice among policyholders is that it has a cash value that allows you to borrow against it for large purchases, like a house. The most challenging decision you’ll have to make is figuring out the policy face value — for this, you may want to consult an insurance professional, so you select the right amount.
Additionally, there are 3 types of permanent life insurance to choose from:
There are many differences between term vs. permanent life insurance. The first step is to identify your life insurance expectations: are you looking for simplicity or something that stays with you for life? Settling your needs will almost always direct you into which life insurance is best for you. But, if you’re still not sure, here’s a reference chart to help you compare term life insurance vs. permanent life insurance.
| Term vs. Permanent Life Insurance | ||
|---|---|---|
| Term | Permanent | |
| Product Lifespan | Term | Whole life |
| Variation Of Premiums | No | No |
| Premium Cost | Lower | Higher |
| Equity (Cash Value) | No | Yes |
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When it comes to settling on which life insurance policy makes the most sense for you, the best place to start is determining your needs, like perhaps you want a policy with equity. Once you know what your expectations are from your life insurance product, you can make a more informed decision as to which product is best for you!
Jessica Fox Jessica Fox has been a freelance writer for five years, with a specialty in health, wellness, and insurance. During this time, she’s written for some of the biggest B2B and B2C brands from around the world. Jessica is also the mother of two young daughters and loves coffee, writing, and working out.
