Term Vs Permanent Life Insurance – What Is the Ideal for You?
The insurance term life is the simplest of all as it should only worry about choosing the amount of coverage and the number of years you want to keep the policy, which can be from 1 year to 30 years. Upon expiration of the term, you must choose between renewing the policy, changing it or simply leaving it to expire and remain without that protection.
It is ideal if you only need protection for a specific time, such as when your children are still small or while you are paying the mortgage on your home. So when that important period of protection for yours has already passed, you can decide not to renew the insurance and save the payment of the premiums.
If you are looking to continue obtaining protection, even if you already have assets of your own to provide constant financial protection to your family until retirement or during your golden years, permanent life insurance is the right one for you, as it does not expire within a specific period of time, of course as long as the payments and the specifications of the policy are met.
It also offers a very interesting savings function that will depend on the types of permanent insurance you choose, the insurer and the conditions of the policy. These can be of the traditional permanent, variable, universal or universal-variable type. You choose the one that best suits you.
The savings associated with the insurance works in the following way: since the insurance is permanent, that is to say that it does not have to be renewed every so often (as it happens with the term), the insurer obtains an average of the price of the policy (since the premiums could be very expensive when the insured is already very old), to arrive at a premium amount that is really above what the insurance costs when the person is young.
Then that portion that is charged more, must be invested in the name of the insured and must be available to him as a loan for when he needs it. It is worth mentioning that these savings are available only to the insured and not to their beneficiaries, since the latter may only have the amount of the insurance once the insured dies.
On the other hand, term life insurance can be more expensive than you think, since many times you have to renew them when they are due, and maybe for that time, the payment of the premiums goes to increase or perhaps you have become ill or have other conditions that do not allow you to buy life insurance again or that the price rises beyond what you can pay for it.
In general, term life insurance can be 1 year, renewable every year; 5 years, renewable; to 10 years; to 15 years; to 20 years; at 30 years; or up to a specific age, for example, up to 65 years, 70 years, etc. The most requested today is the 20 years. Also, term policies can be leveled (in which the insured amount does not change with the passage of time) and declining (due to their characteristics, the price could be lower than the level ones).
While permanent policies do not expire for a long period of time, in which you will also keep the same payment during that period, the term policies may be renewable or not and the amount of the premium will increase each time it expires.
When they are renewable, it means that when the term of the policy expires, the insured will not have to repeat the medical examination to qualify, nor run the risk that by that time his health has deteriorated and he is no longer eligible for the same insurance as Had before; On the other hand, if you choose your non-renewable term policy, you will have to prove again that you are eligible to acquire that policy when it expires.
If you want to know more about term policies and permanent policies separately, you can read the articles corresponding to each one of them. Take into account the specific needs of your family and add to the equation how much coverage you will need.
Only then will you be able to exactly compare a policy equivalent to a term and a permanent one. These comparisons made here are therefore generalities that we hope will help you to make your own comparison and make it easier for you to make the decision that best suits you.