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Term Insurance VS Permanent Life Insurance


Term vs Permanent Insurance

Term vs Permanent Life Insurance

According to industry experts, most people don’t have enough life insurance. And, more than half of consumers said their household would be in immediate or near immediate financial trouble if the primary wage earner died today.

When considering life insurance, one of the most important factors to understand is the difference between term and permanent insurance. Here’s an inside look at both:

Permanent life insurance at a glance:

•    Permanent life insurance remains in force for your whole life, as long as you remain current with your premiums.
•    In exchange for fixed premiums, the insurance company promises to pay a set benefit when the policyholder dies.
•    Permanent life insurance policies build up cash value — effectively a cash reserve that pays a modest rate of return.
•    Tax deferred growth
•    Guarantees are based on the claims-paying ability of the issuing company.
•    Most permanent insurance policies will let policyholders borrow against their policy’s cash value under fairly favorable terms.
•    When the policyholder dies, his or her beneficiaries receive the benefit from the policy.
•    Depending on how the policy is structured, benefits may or may not be taxable.
•    If the policy lapses, matures, or is surrendered, the loan balance will be considered a distribution and will be taxable.

Permanent Life Insurance Benefits:

  • Can have tax free distributions
  • Competive returns
  • High contribution limits
  • Additional Financial Benefits
  • Collateral Opportunites
  • Save Harbor
  • Can have no – loss provisions
  • Guaranteed loan options
  • Unstructured loan payments
  • Liquidity, Use and Control

Term life insurance at a glance:

•    Term insurance is the simplest form of life insurance; it provides temporary life insurance protection on a limited budget.
•    When a policyholder buys term insurance, he or she buys coverage for a specific period and pays a specific price for that coverage.
•    If the policyholder dies during that time, his or her beneficiaries receive the benefit from the policy

•    If he or she outlives the term of the policy, it is no longer in effect, and the person would have to reapply to receive any future benefit.

•    Unlike permanent insurance, term insurance only pays a death benefit. That’s one of the reasons term insurance tends to be less expensive than permanent insurance.
•    Many find term life insurance useful for covering specific financial responsibilities if they were to die unexpectedly.
•    Term life insurance is often used to provide funds to cover dependent care, college education for dependents, and/or mortgages.
•    Less than 2 percent of term policies will actually pay out a death benefit.

Term or Permanent

Whether permanent or term life insurance is the best choice for you? Will depend on a variety of factors, including your unique goals, needs, and circumstances?  Being able to understand how life insurance works will help you help you make an intelligent, informed choice. No matter who you will talk to about insurance will have an “opinion” about insurance this is derived from a couple of view points 1. The people they have met 2. The books they have read 3. The experiences they have had and lastly those whom they listen to for financial advise. We believe that finding the right financial tools to solve the financial concerns our clients have is the best way to address this.
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