Term vs Permanent Life Insurance – the differences explained.

Term vs Permanent Life Insurance – the differences explained.

Many people view purchasing life insurance as a mundane task. But today’s policies offer greater peace of mind and prosperity, something that is far from dull in these uncertain times.

Life insurance products offer so many ways to protect your family, including riders that can customize the product to your needs. September is Life Insurance Awareness Month, which is a perfect time to increase your financial literacy by discussing what you can achieve with a carefully selected policy.

Do you know the difference between term and permanent life insurance? And which is better for you?

The answer depends on your lifestyle and your goals.

Term life insurance costs less and offers higher death benefits. It covers a limited time frame (often 20 or 30 years), so if you outlive your policy, there will be no benefit for your survivors. This policy is meant to replace your income in specific ways, during peak earning years.

For example: Your policy could be used to pay your mortgage, cover the cost of a child’s education, or help with household costs to support your spouse.

Permanent life insurance, also called whole life insurance, is in place throughout your life. It guarantees a death benefit to your survivors. It is often used to cover funeral costs and estate taxes with its tax-free cash value. It is usually more expensive, with smaller death benefits than term life insurance, but is guaranteed to provide cash to your loved ones at a stressful time, when they will need it.

It doesn’t matter if you die a few years from now, or if you live for another 50 years; this policy covers you for life, provided you make your payments. It offers investment potential because of its cash value. It allows you to grow the investment for the benefit of your loved ones. But this money can be made available to you in the event of an emergency (however, taking money out of it lowers the death benefit and it comes with a penalty).

Many policies allow you to add riders for supplemental coverage.

For example: Accidental death and dismemberment, long-term care, chronic illness, and even a waiver of your premiums if your health declines in a way that makes you unable to make your payments.

Life insurance can be important, both to your investment strategy and to your peace of mind. It is a profoundly loving way to support your family.

Speak to your financial advisor to discuss how life insurance can be beneficial to your family’s future.

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