Term insurance and permanent insurance both provide coverage in the event of the death of the insured. The difference comes in the amount you pay out in premiums. I think it important that you know why there is a difference between term insurance and permanent insurance costs.

  • Term Insurance

    There are several different types of policies. For the sake of this discussion you need to see term insurance for what it really is. These policies provide protection for specific periods, thus they are temporary policies.

    You can buy a term policy for 1 year, 5 years, 10 years, 15 years, 20 years, 25 years, 30 years or to age 65. Some carriers even provide up until age 80 or 90. The point is that these are limited as far as how long you can keep them.

    It is important to note that when they go to age 80 or 90 there usually is a premium increase or several increases as you get older. Some premium costs can get quite prohibitive as you get older.

    Some term insurance premiums remain level throughout but the longer the term period the higher the cost. If you choose a policy the annual outlay for this policy will be less than that of the policy but more than that of a life policy.

  • Permanent Insurance

    Permanent life insurance usually has a level premium as well as a level death benefit for the rest of your life, even if you live to age 100. Your annual outlay for any will be considerably higher than what you pay for any term policy.

    The reason is that the carries the risk for a longer period of time. As more as you get older the life insurance carriers build into the premium a much higher cost for their protection.

    They also have a built into the policy which you can take out if you surrender your policy in the future. The cash value is a return of premium. They charged you the high premium for your permanent policy, you went for a few years and you didn’t die, your policy provides a cash value which you can get upon the surrender of the policy.

    You may on the other hand take a portion of this cash value in the form of a loan. You pay it back on your own schedule. Any unpaid loan will be deducted from the death benefit upon death.

    If your permanent policy is a participating policy you may also get a in addition to your cash value. Dividends, however, are not guaranteed. They depend on the investment performance of the company and how efficient they have been in keeping down expenses.

If you want more information on the differences between term insurance and permanent insurance please examine the pages on each type.

Don’t Pay Too Much For Your Life Insurance Policy – Get Low Cost Life Insurance Quotes From Quality Carriers. | |

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