Term Life vs. Whole Life Insurance (Permanent)
Determining the life insurance policy that is best for you takes a fair amount of research. First, evaluate the basic categories of life insurance – term life insurance and whole life insurance, which is a type of permanent life insurance. If you decide that a term policy best meets your needs, you can move on to evaluating insurance companies. If a permanent policy is a better match, your next step will be to review the different types of permanent life insurance policies available before researching companies.
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To assist with your investigation, Life Insurance Info provides this valuable comparison of permanent life insurance and term life insurance. The following chart is compiled from comparison information obtained from the State Farm Insurance web site:
|
Term Life Insurance |
Permanent Life Insurance |
Coverage |
Specific period of time, or “term” |
As long as you live |
Best suited for |
Short-range goals |
Long-range goals |
Financially, best for |
Those with a more limited budget |
Those with more financial means |
Premium |
Lower cost, but increases when policy is renewed |
Higher cost, but stays the same for entire policy |
Money available to borrow? |
No, doesn’t earn any cash value |
Yes, cash value can be borrowed against tax free; will decrease the death benefit |
Death benefit |
Death benefit provided for the specified time period |
Death benefit provided for as long as you live |
Cash Value |
Does not accumulate cash value |
Accumulates cash values, on a tax-deferred basis |
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Other Considerations Regarding LifE Insurance
It is important to note that, in some instances, a combination of both term and permanent policies may be the best fit. Additionally, while term life insurance may be a starting point for some because of their financial situation and needs, term policies can be converted to a permanent policy any time prior to age 75. So, if your goal is to obtain permanent life insurance, but you cannot afford it financially, you may consider obtaining the term coverage now and converting to a permanent policy later.
Life-Insurance-Info.us is not a life insurance broker or carrier, and cannot issue life insurance policies. This site provides free information on insurance providers and coverage options. We are not associated with the companies profiled on Life-Insurance-Info.us and we make no representation, express or implied, that you will receive a quote from a specific company profiled herein. Products and policies may not be available in all states, and product and policy information is subject to change without notice. Please contact the insurance company directly to answer your policy inquiries.
Last Updated: June 16, 2009
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