One of the first decisions to make when purchasing life insurance is choosing a duration. If you choose term life insurance, you’re getting a policy that is active for a set number of years, and once that time passes, your beneficiaries will not be able to get the death benefit. Permanent life, on the other hand, is active for your entire life as long as you pay the premiums. Each comes with its own advantages and disadvantages that make one option more ideal than the other.

How Does Term Life Work?

Term life insurance is a policy that is typically active between 10-30 years. Premiums are cheaper than other forms of life insurance, which is especially appealing to those looking for affordable options. Once the policy expires, policyholders can renew it – however, it is possible to be denied renewal.

It comes in these forms – Yearly Renewable Term, Level Term, and Decreasing Term. 

Yearly Renewable Term stands out because it’s not limited to a number of years. You can have it for as long as you like, but it is important to consider rising costs. At a certain point, the premiums may increase to the point where they’re no longer affordable.

Level term is active for a number of years, with premiums remaining the same throughout. Renewal is not guaranteed unless you have a guaranteed renewal rider.

Decreasing term is for those wanting asset protection, as the death benefit decreases over time. Policyholders tend to have other life insurance policies along with this since the death benefit is not as sizable as other forms of life insurance.

How Does Permanent Life Insurance Work?

Permanent life insurance is more costly but offers a savings element that term life policies don’t have.

These policies offer a savings component, steadily accruing a cash value that can ultimately be borrowed against in times of need.

Permanent life insurance policies can come in the form of Universal Life and Whole Life.

Whole Life builds according to a small interest rate. The funds accrue tax-free and are only taxed upon withdrawal. In addition to plans with monthly premiums, individuals seeking this policy also have the option to purchase it as a single premium (such as a Single Premium Whole Life policy), where one pays out a large lump sum upfront without having to make any further payments. For example – one can make a single premium payment of $50,000 to get a policy with a $100,000 payout.

Universal Life has an added investment component in which the cash value can build according to stock market performance. This bears a higher risk, but in times where the market is thriving, it gives policyholders greater rewards.

Which Policy Is Right for You?

At Game Changing Benefits, we’ll help you get the life insurance policy that works best for you. Whether it’s term or permanent, we can help you get it, so that you’ll be able to help your loved ones achieve a greater sense of financial freedom. Call us today at 972-331-1060.