Does the thought of not being around to take care of your family make you feel restless? Do you often worry about what you are going to leave behind for your family? If these thoughts have started bothering you then maybe it is time to think of life insurance to secure yours and your family’s future. Life insurance offers financial security to your dependents, especially when you won’t be around to take care of them.
Now, people often get confused about the life insurance policy they should buy. “Should I buy term or whole life insurance?” is the question that is often asked. Before buying a life insurance, it’s best to get thorough knowledge about the two types. In this article, we’ll discuss in detail term vs. permanent insurance to help you make an informed decision.
If you want an insurance policy that provides coverage for a specified period, then term insurance is what you need to buy. Term policies are stretched over time such as 10, 20, or 30 years. If you have a term insurance policy and die within the term specified in the policy, then the payouts will be given to your beneficiaries. Term insurance policies have no cash value. If the insured person dies within the term specified in the policy, then the death benefits will be paid to the named beneficiary, but it will have no cash value.
You must note that term insurance is can be an excellent choice for young individuals. When you’re young and able, you’ll have certain goals for yourself and your family. This may include buying a house or saving for your child’s education. Since this insurance policy is for a specified number of years, it can come in handy to fulfill such goals. Such an insurance policy also suits people who have dependents and need protection against the loss of income but don’t have enough bank balance.
Unlike term insurance, permanent insurance or whole life insurance provides lifelong protection and will remain active as long as you continue to pay the premium. Permanent insurance is also referred to as cash value insurance as it helps build cash value over time. Plus, it provides death benefits to the named beneficiaries. Permanent insurance is expensive than term insurance as this insurance policy is designed to exist until you die. As a result, it is oversold. There are different types of permanent or whole life coverage available for you to choose from. You can opt for ‘universal life insurance’, a form of permanent life insurance, which provides you with the luxury of going for flexible premiums, and a gradual buildup in cash value. Another advantage of using ‘universal life insurance’ is that it’s one of the most efficient ways to generate tax-free wealth inside of the policy, which can also be used to pay off any future debt you incur. If unused, the same wealth can help you fund your retirement as well.
All in all, a permanent insurance is an excellent choice for people who are older (age 40 and above). But, again, if you seek longer coverage, then this could be the best choice for you, even at a young age.
To find out more about term vs. permanent insurance, get in touch with our financial advisors. We will guide you regarding your finances and help you choose a policy that fulfills your requirements.