Life Insurance Policy : Which is better For You: Term or Permanent Life Insurance?

1. Life Insurance Policy

2. Which is better For You: Term or Permanent Life Insurance?

3. Permanent life insurance is one of the most confusing topics in personal finance. This makes a discussion of whether to buy term or permanent insurance a daunting task. • Let’s first define some terms: • Term insurance provides a level premium and a level-death benefit protection for a stated period of time, such as 10 or 20 years. • Permanent insurance typically provides both a death benefit and cash savings. There are different types of permanent insurance, including whole life, universal life, index-universal life, variable life and variable-universal life.

4. The initial premium for permanent insurance is higher than for term insurance with a comparable death benefit. • A portion of the premium may be invested, eventually providing a buildup of cash value. • Pros and cons of term insurance. • Term insurance can be a good fit for younger individuals and families, who need protection against the loss of income of a primary earner for a stated period of time, at an affordable cost. • In most cases, a medical examination will be required.

5. Term insurance does not build cash value, so at the end of the term, the policy will have no value. • An additional benefit of term insurance is that it is a simple product, so comparison shopping is quite easy. • The market for selling term insurance is competitive, presenting good values for consumers.

6. Blended policies are not a panacea. Steck generally does not recommend them because of the heavy reliance on non-guaranteed dividends. • When considering the purchase of permanent insurance, Steck believes it’s important to focus on what is guaranteed and what is projected (or hypothetical).

7. Steck believes consumers benefit from getting an objective, third-party opinion, but feels they can do so without incurring a fee by using an independent brokerage firm. His firm offers a “performance evaluation” of clients’ existing life insurance policy at no cost. He says many clients require only an adjustment to their existing policies, rather than replacement insurance. • Source : (bit.ly/1cJoiJl)

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