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Term vs. Permanent Life Insurance: Which is Right for You?



  Life insurance

Term and permanent life insurance each have their place. You may need a combination to reach your goals.

Term vs Permanent Life Insurance

The biggest question to answer when buying life insurance is whether you need a term or permanent insurance. Each type has advantages and limitations. To make the right decision, you should know and understand your options.

Here are some questions to keep in mind:

  • How will the money from this insurance be used?
  • Do my life insurance needs cover my entire life or a certain period of time?
  • Do I want to collect cash value or just have death benefit coverage?
  • How much life insurance do I really need and what is my budget?

Keep in mind that you can use a mix of products to meet different life insurance needs.

TERM ̵
1; COVERAGE OVER A SPECIFIED PERIOD

Lifetime insurance probably meets most life insurance needs. It provides coverage for a limited period of time to satisfy a temporary need, such as debt payment or compensation of income. Forward insurance is usually the cheapest; however, the insured must die within the specific time period (usually between one and 30 years) for the beneficiaries to collect the insurance. Long-term insurance does not accumulate cash value. Also keep in mind that many lifetime products can be converted to permanent products depending on the conversion privilege in the policy. and cash accumulation. The premium is usually higher and continues for a longer period of time. These policies are generally for needs such as final expenses, property planning and deferred income. Permanent life insurance comes in two basic forms: the whole life and the universal life.

Whole life

Whole life products are about guarantees. These products provide guaranteed coverage, guaranteed cash values ​​and guaranteed premiums. Due to the strong guarantees, these products are often the most expensive. Entire life insurance owners can apply for a loan against the tax-deferred cash value. This cash can be used in an emergency and repaid later or simply deducted from the insurance death benefit. They usually also have these additional insurance value options:

  • Automatic premium loans – use funds from the cash value to pay any delayed premiums
  • Extended insurance – premiums cease and the insurance cash value is used to keep the same death benefit in force regardless of maturity cash value7 allows [19659007allowsReducedpaid-ininsurance-premiumsceaseandthecashvalueoftheinsuranceisusedtokeepareduceddeathbenefitinforceforanamountthatthecashvaluewillbuy
Universal Life [19659016] Flexibility is the biggest advantage of universal life policy. The cash value grows based on an interest rate or potentially an investment component. Funds can be withdrawn as loans or withdrawals; the insurance owner may, however, have to pay a fine for withdrawals during the first year of the insurance. Another benefit of universal life insurance is that premium amounts and death benefits can be changed to suit your needs. . Knowing what these needs are and developing a plan to deal with them can be a daunting task, but a skilled insurance advisor is an invaluable resource. Take the time to review product types with an independent agent to better understand the pros and cons of different types of life insurance policies.

Blog compliments from The Cincinnati Life Insurance Company. Neither Cincinnati Life Insurance Company, Bolder Insurance nor its affiliates or representatives offer tax or legal advice. Consult your tax advisor or lawyer about your specific situation. For insurance services and additional information, speak with an independent agent, such as Bolder Insurance, or one who represents The Cincinnati Life Insurance Company. For a complete account of coverages and exceptions, see the insurance contract. All applicants must be approved by the warranty. Products and riders are available in most states.


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