Tom's Blog
Many people may find the whole concept of life insurance rather confusing especially when you hear ALL of the different types of life insurance options that are available. Typically life insurance is broken into two main categories. The main types you may hear are “term” and “permanent” which brings you to the everlasting question… Term insurance versus permanent life insurance: What’s right for you? You can’t answer that question without knowing some basic differences between the two.
What is Term Life Insurance?
Term insurance is specifically designed for life insurance coverage for only a specified “term”, which may be 10 or 20 years, at a reasonably priced cost. This type of insurance has a death benefit but does NOT build cash value so at the end of the term, the policy has zero value, so no equity or value has been established.
For younger families on a budget that still wish to have life insurance protection, term insurance may be the best choice for a stated period until they can afford or wish to purchase a more permanent coverage. For many consumers, the only way they can afford the coverage they need, for the specific time they need it, is through term life insurance.
What is Permanent Life Insurance?
Permanent insurance may be the more confusing of the two because there are many different types of permanent insurance, including whole life, universal life, and variable life. Permanent insurance provides both a death benefit AND an accumulation of cash savings which can later be used to borrow against it tax-free for retirement, education costs, or even a down payment on a home.
The premiums for permanent insurance run higher than that of term insurance, yet because a portion of the premium may be invested, there is a buildup of cash value over time, which is a good selling feature for some. Also, once you have been approved for this coverage, the carrier cannot cancel your policy. *Some exceptions may apply so make sure you check with your local N.C. independent insurance agent to verify. Regardless of your age or health, the insurance will remain in force. Also, if you decide to stop paying premiums and relinquish your policy, the “guaranteed” policy values are still yours.
Let Us Help You Find the Right Type of Life Insurance Today!
If the term coverage is “convertible” (the coverage can be “converted” to a comparable permanent life insurance policy), you can get the coverage you need TODAY with the ability to obtain permanent coverage in the future. The ability to convert term into a permanent policy lets you “lock in” your premium and your coverage can never be canceled as long as you pay your stated premiums. In this respect, term insurance meets a valued need for many consumers.
*While many term policies are convertible, some are not, so ALWAYS check with your N.C. independent insurance agency to get the details you need to know!
Theoretically, term insurance often predominates as the life insurance of choice for most consumers because of the more inexpensive premium cost and people’s preconceived notion of only thinking “short term.” Our expert staff here at Paramount Insurance can meet with you to discuss your life situation, health, budget, and answer all of your questions so that we can find the right type of life insurance that protects YOUR life at a price you can afford.
