Both term and permanent life insurance provide death benefits. The difference is that term life insurance provides coverage within a specific period only. If the insured person is alive at the end of the contract period, there is no payment by the insurance company to either the insured person or his heirs. At the end of the period, you can get a new premium. Term insurance is usually a good choice for people who need low-cost insurance for a specific period of time, for example until their kids finish college or until their mortgage is paid off.
Whole life insurance, or permanent life insurance, is an extended term insurance policy with an accumulating savings element. If you have a high income and problems saving – whether due to a lack of discipline, time, or knowledge – whole life insurance may be a good option. Whole life insurance is also ideal for people who have health issues or are worried that they might contract an illness that could lead to “un-insurability”.
Term and permanent life insurance both have the advantages and disadvantages. Keep in mind, you can own more than one life insurance policy. So, for instance, you can buy a 30 year term life policy to provide affordable life insurance protection while your children are growing up, and you can have a permanent life insurance policy to provide the funds needed to pay for your final expenses, including the cost of your funeral and burial. If you are married, you may want to consider a term life policy on both you and your spouse. Also, if you leave your job you may not be able to continue your group life insurance, so don't necessarily count on your group term life insurance coverage being there if needed in the future, as circumstances may change regrading your employment. And, rates for term life insurance are usually much lower than most people epxect, so make sure to compare life insurance rates to help you finad affordable coverage. It only takes a few minutes.
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