A Comparision : Term and Permanent Life Insurance
It is very confusing, should i take Term Insurance or Permanent Insurance. You ask your Insurance agent, he gives a confusing answer. No matter what he tells, his objective to sell the product. There are very few Insurance agents who guide their clients with proper information or even look into their required needs.
We all look into insurance as an Investment, and it is good. With returns gauranteed and also leave a legacy for the family if something goes wrong. But again, which type of insurance should i take.
Below we have compared difference between Term and Permanent Life Insurance showing the advantages and Disadvantages.
let us start with Term Insurance
Advantages:
- Initial Premiums are lower than those of Permanent insurance, allowing you to buy higher levels of Coverage at a younger agewhen the need for protection often is the greatest.
- It’s good for covering needs that will disappear in time, such as mortages or car loans.
Disadvantages
- Premium increase as you grow Older.
- Coverage ends at the end of the term
- Renewal may be too expensive or you may no longer qualify
- There are no cash values
Next let us see what are the advantages and disadvantages of Permanent life Insurance.
Advantages:
- As Long as premium is paid, protection is Gauranteed.
- Depending on the policy, the premium can be fixed or flexible to meet personal financial needs.
- The policy accumulates cash value against which you can borrow(loan). You can also borrow cash to pay premium for the rest part of the policy.
- The policy cash value can be surrendered, in total or part, for cash or converted into annunity.
- A provision or rider can be added to a policy that gives the option to purchase additional insurance without taking a medical exam or furnish any eveidence of insurability.
- other options like, reduced paid-up or extended term insurance are also available.
Disadvantages
- Required premium levels may make it hard to buy the amount of protection required.
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