If you’re in the market for life insurance it’s important to shop around for life insurance quotes before you make a purchase. You’ll want to make sure you find the best type of coverage for your specific needs. Buying life insurance is an important decision so it needs to be considered carefully. This post is intended to give you an outline of the advantages and disadvantages of term and permanent life insurance.

Before I talk about the advantages and disadvantages of each type of life insurance, I’d like to quickly review what each type is…

In a nutshell, permanent life insurance provides coverage throughout your lifetime and also provides a savings element that builds cash value.  The policy never ends as long as you pay the premium.

Term life insurance is temporary life insurance. Each year, you pay the premium to cover the risk of death during that year. Term life insurance has no cash value. The only way for your family to collect anything is if you die before the term life insurance expires.

Now that you know the difference between the two types, let’s talk about the advantages and disadvantages:

Permanent life insurance

• Permanent life insurance is a lot more expensive than a term policy, so if you’re on a tight budget, this type of coverage may not be for you
• If you’re interested in long-term savings and can afford to keep a permanent policy in place, it’s a good investment
• With permanent life insurance, part of your premium pays the cost of the death benefit, while the rest is paid into a separate account for savings
• Permanent life insurance is difficult to predict in terms of investing

Term life insurance

• Generally, term life insurance rates are lower than permanent life insurance premiums
• The lower rates allow you to buy larger amounts of coverage at a younger age, when the need for life insurance is greatest
• Term life insurance can be used to pay other financial commitments that will diminish over time, such as mortgage payments and loans

• In the event of death, the life insurance beneficiary generally collects the death benefit, free of income tax.

I’m passionate about making sure people protect their families. I’ve seen too many people buy permanent policies that they can’t afford over the long run and therefore dropped their policies leaving their families unprotected. Be sure to check out a multi-carrier brokerage, like AccuQuote, to compare life insurance rates from top-rated life insurance companies.