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Term Life vs Permanent Life/Whole Life Insurance
Experts have spent a lot of time debating over whether it is more advantageous to obtain Term Life or Permanent Life insurance coverage. (whole life insurance is one of the most popular types of permanent life insurance.) Each type of life insurance has its benefits and drawbacks.
Premiums for term insurance are very inexpensive compared to permanent insurance for healthy people up to about age 50. After age 50, premiums for term life begin to get progressively more expensive, although nowhere near as high as those for permanent life insurance.
Young families with financial obligations are in most cases better off with term insurance. Significantly lower premiums enable them to purchase substantial coverage to protect against loss of income.
Permanent life insurance is usually purchased by older, more affluent individuals with a large amount of monthly disposable income necessary to support the higher premium requirements for this type of coverage. They have a higher net worth and may need insurance for tax and other financial planning purposes.
Below is a snapshot of what each type of life insurance offers to help you make your decision.
People who want all of their premium dollars to go toward the purchase of a death benefit for the least amount of premium outlay. Policy is easy to understand.
Get a Term Life Quote>> |
Affluent people who are looking to spend a substantial monthly premium for lifetime protection. More complicated to understand.
Get a Permanent Life Quote>> |
| Policies can have a guaranteed premium for anywhere from 5-30 years. |
A permanent life policy can stay in force as long as the insured is alive. |
| You can cancel your policy with no penalties. There is no cash surrender value since the policy pays only on death. |
You receive a lump sum payment of the cash surrender value. There are surrender charges if you drop the policy in the initial years. |
| Paid out to beneficiaries TAX FREE upon the insured person's death. |
Paid to beneficiaries TAX FREE upon the insured person's death. |
| None. |
Cash value comes standard with permanent life insurance. |
| Very inexpensive compared to cash value insurance. Lower premiums allows you to buy lots of coverage. |
Substantially higher premiums than term insurance due to the cash value buildup component. |
| Lower than permanent insurance. Usually increase as the insured person ages. Premiums vary according to the guarantee period. |
Premiums can remain fixed for the life of the policy. Premiums are usually much higher than for term insurance because of the cash value accumulation. |
| None. |
Has potential to build up cash value that will be returned to you if you surrender the policy. This cash value grows tax-deferred while the policy is in force. You may borrow against or withdraw the cash surrender value. |
| Most policies can be converted to permanent insurance without an exam. |
Policy features and design options are very flexible. Policyholder may choose when to keep the policy in force for life. |
| Term Life Info >> |
Permanent Life Info >> |
For Term Insurance >>
For eLifePolicy No Medical Exam Term Insurance >> |
For Permanent Life Insurance >> |
Request a quote for life insurance coverage today >>
If you still need help deciding, see: Term Life vs. Whole Life Insurance -- What is the Difference?
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