One of the first decisions that clients need to make when buying life insurance is the type of policy that suits their current needs. This can (and will) change over time. By researching the features of available life insurance policies and working together with an experienced life-insurance agent, you can easily learn which policy is right for you.
Term Life Insurance
As the name suggests, term life insurance provides coverage for a specific time-period. A payout will only be made if the insured person dies within the set term described in their policy. Due to the temporary nature of these plans, term insurance is usually much less expensive than permanent. This type of insurance is appealing to young adults or families who are looking for inexpensive insurance, or those who have a temporary need for insurance, ex. holding a mortgage.
Don’t worry if you still require the insurance after the term is up. Most Carriers offer two ways to continue your insurance coverage without reapplying or producing new medical information. One way is to simply renew the insurance for another term. The other, is to convert the insurance to a permanent plan.
Permanent Insurance
Permanent life insurance lasts your entire life and does not expire (unlike term life insurance). As long as the premiums are being paid, you will always have your life insurance policy. Most types of permanent insurance include a savings component known as cash value; the longer you pay into your policy, the more its cash value grows.
Permanent products are initially more expensive, but as term policy premiums continue to increase with each renewal, permanent plan premiums remain the same for the life of the policy.
Generally speaking, younger individuals often begin with a term policy and as their income grows, they seek out a more permanent solution.
