Life Insurance: Term Insurance v. Permanent Insurance part 2.
Term life insurance provides temporary protection for a set period of time. Permanent life insurance provides permanent protection and involves an internal savings component. e best choice for you depends on a variety of factors. Your answers to the following questions can help you select the best path.
Is the need for coverage temporary or long term?
When there is a temporary need for life insurance protection, term coverage may be appropriate. If the need for insurance coverage is estimated to last a lifetime, a life insurance professional may recommend a long-term option.
Are you interested in a tax-efficient savings component or simply insurance?
Permanent life insurance offers the ability to accumulate cash value in addition to providing death benefit protection. Additionally, the cash value grows on a tax-efficient basis and can be easily accessed without a tax impact using properly structured loans and withdrawals. Term life insurance is insurance coverage without the savings component.
Do you need your premium to stay the same or can you allow for flexibility in timing and amount?
While all life insurance policies require that premiums be paid to cover policy charges, permanent products, such as Universal Life, may be designed to offer more flexibility with regards to premium amounts and payment timing. Term coverage usually has a level premium that must be paid on time to ensure the coverage stays in force.
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Disclosure: This piece is intended for educational purposes only and should not be construed as advice. You should consult with a Financial Professional before you make any decisions.