Life insurance vs. term life insurance – What should you choose?


When choosing a life insurance plan, many face the same dilemma: should they go for a permanent one or for a term plan? Depending on your particular situation, the best option varies. But how do you assess what you need? Below we have more information on the main differences between the two insurance plans mentioned previously. Continue reading if you want to find out which one suits you best.

Term life insurance policies

Term life insurance policies may be the most simplistic insurance packages that exist. They offer coverage for a given amount of time, and they are frequently chosen by people who activate in dangerous industries or who are the main responsible for the financial well-being of their families. Also, these insurance policies may be one of the most affordable options available in the insurance industry. The interval in which the holder of the term life insurance policy is insured varies, these policies being available in several options.  

  • Five years;
  • Ten years;
  • Any longer interval than the mentioned ones.

If the holder of the policy happens to die during the given interval, the remaining members of the family will benefit from several advantages.

  • Income replacement;
  • Funeral expenses;
  • Debts in the name of the holder or immediate family members;
  • Child education.

These amounts are tax-free and can be used as the remaining family members consider it necessary. If the term expires, the holder can prologue it with the desired interval or it can convert the policy into a permanent life insurance policy. Also, in some cases, the holder might prefer to cease the collaboration with the current provider and choose a different one.

Permanent life insurance policies

Another popular option when it comes to life insurance policies is the permanent one. This happens because accidents may occur at any given time and they are difficult to anticipate. Also, after the holder of the policy dies, the beneficiary of the policy will receive a generous amount, oftentimes more than the equivalent of ten yearly salaries. You can get a life insurance quote at various insurance agencies and pick the most appropriate for your case. However, this money can be used for various purposes, from funeral expenses, to pay off debts, pay the necessary taxes and replace the source of income that you provided during your lifetime. Unlike the first option, this type of insurance policy doesn’t have to be periodically renewed, and offers a financial cushion for your family, regardless at the point in time when you happen to die.

Although not many people welcome with such a clear mind the moment of their deaths, this is necessary because knowing that your family will be insured comes as a comfort. In many cases, after the death of the main provider of a family, many fail to pay their bills, even mortgage, and fail to succeed in offering their children the desired education. Thus, pick wisely between the two options available.