Term Life Insurance vs Permanent Life Insurance: The Pros and Cons

Purchasing Life Insurance is one of the most important decisions you can make. But once you have decided to acquire a policy you will be faced with a basic dilemma: Term Life Insurance or Permanent Life Insurance?

As we’ll see, the answer depends on your insurance needs and your budget.

Term Life Insurance

Term Life Insurance is the most basic of the two types of Life Insurance. As its name indicates, this policy covers only a specific length of time that may be 5, 10 or 20 years depending on the carrier.

Pros

  • Convenient: This is usually the most affordable, no-frills Life Insurance option.
  • Convertible: Some Term Life Policies can be converted to Permanent Life Policies, although this may vary depending on the carrier.
  • Adaptable: You can match Term Life Insurance to a period of your life of specific concern. For example, you may decide to be covered while you pay off your mortgage.

Cons

  • Your premiums may go up: Once your policy expires, your premiums may become more expensive because you will be older. However, as explained above, some policies are convertible.

Permanent Life Insurance

This is a more complex product than term life insurance. Permanent life insurance offers lifelong coverage and some interesting financial options. In fact, Permanent Life Insurance policies may include a cash value feature. This component is basically an investing account built into your policy. You can withdraw funds from it, take out a loan against it, or let you beneficiaries enjoy the value accrued over time.

Pros

  • Lifetime coverage: This option covers you for the duration of your life and pays your beneficiaries no matter when you pass away, as long as your premiums are paid.
  • Options: Permantent Life Insurance comprises options such as whole, universal and guaranteed.

Cons

  • More expensive: The cash value feature makes Permanent Life Insurance costlier than Term Life Insurance. If your Permanent Life Insurance policy has a cash value option, your premiums pay for three things:  The actual insurance cost, policy fees, and the cash value

This guide has provided you with the basic guidelines to understand the differences between Permanent Life Insurance and Term Life Insurance. However, it’s important to contact an expert to help you go beyond the basic pros and cons so you can customize your policy to your specific needs.

At La Popular Insurance we offer auto, home, commercial, health and life insurance. With 26 years of experience, we provide extremely qualified assistance at an affordable price. Contact us today by email or telephone ( 323-566-5063 , 562-928-1960, 323-773-9793 ) to discover more about our wide range of services.