Many times I am asked which is the "best" type of life insurance to own, Permenant or Term. The stock answer is: The type that is in force when you need it.
Over the years, I have had to deliver several life settlement checks and none of the beneficiaries ever asked what type of insurance their loved one had, they only wanted to know 'how much was it' and 'were there any other policies'.
The two types of Life Insurance are designed for specific needs. To determine which is best for you and your family, contact your insurance professional. Think of 'Term Insurance' as 'renting a residence'. Generally your rental agreement is for a specific period of time, so is 'Term Insurance' (ie: 1 yr, 5 yr,10 yr, 20 yr, or 30 yr). Each time your lease is up, you must move on or renew your lease, usually at a higher price. The same is true with 'Term Insurance', at the end of the term, you must renew (usually at a higher price and only if you are medically qualified), move on (and do without) or convert to a permenant policy (ie: buy a home). Because it is only for a specific time period, term is much less expensive than permenant (like renting is less expensive than buying a home).
Buying permenant (cash value, whole life, universal life, etc.) Life Insurance is like buying your home, usually more expensive in the begining, but less expensive in the long run because you have the opportunity to build equity (cash value) much like in buying a home.
Too many times, I have seen young individuals think they have all the life coverage they need through their employer and don't need to own any policies individually, then they change employers (for a variety of reasons) and don't have the same type of benefit package with their new employer OR they become self employed and have NO benfits at all. Then they realize they still have young children at home depending on them for everything and too many times the household budget then does not allow for life insurance. This is when the Permenant Life Insurance would be most valuable because the Cash Value (equity) would allow them to use the equity to do many things. Such as pay the life insurance premium either during periods between jobs or at the start of a business, provide a non-qualifying loan to help start a business, pay the monthly bills until the business gets going, and many other things.
Once again, to determine which type is best for you: TERM or PERM, consult your Insurance Professional. If you do not have an Insurance Professional you currently work with, feel free to contact me at 512-251-5782.
Life Underwriter Training Council Fellow (LUTCF)
Farmers Insurance Group of Companies
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