There are two main types of life insurance that you can choose from: term and permanent (sometimes referred to as ‘whole life’). The more that you understand about the differences between term and permanent, the easier it is going to be for you to choose the right one for you and your family.
Term Life Insurance
Essentially term life insurance is a policy that protects you for a specific period of time. The most common time periods are 10, 20, and 30 years, though you may choose any length of time that you may require, given that your insurance provider will accommodate those terms.
Term life insurance policies do not build cash values over time. So when you purchase a term life insurance policy, you are paying for protection and nothing else. In other words, you would not be paying into some type of investment.
You are usually given the option of renewing your term life plan at the end of the period. It is less expensive, on average, than permanent life insurance.
Permanent Life Insurance
When you purchase a permanent life insurance policy, you will be getting protection for your entire life. Many of these policies will build cash value over time, which means that if you have an emergency at some point in time, you will be able to take cash out of your policy (usually with a fee) to help cover those expenses.
Both types of life insurance policies can provide an important level of protection for your loved ones in the event that something happens to you. If you have a family, it’s best to make sure that they will be financially protected into the future.