Term vs. Permanent Life Insurance - What are the differences you need to know?

When considering life insurance options, individuals often have to decide between term life insurance and permanent life insurance, both of which serve different purposes and have unique advantages and disadvantages. Here's a breakdown of their characteristics:

Term Life Insurance:

Coverage Duration: Term life insurance provides coverage for a specific period, such as 10, 20, or 30 years.

Premiums: Premiums are generally lower compared to permanent life insurance for the same coverage amount.

Death Benefit: If the insured person passes away during the term of the policy, the death benefit is paid out to the beneficiaries.

Cash Value: Term life insurance policies typically do not accumulate cash value.

Renewability: Some term policies offer the option to renew at the end of the term, but the premiums may increase significantly.

Convertibility: Many term life insurance policies allow conversion to permanent life insurance without the need for a medical exam.

Permanent Life Insurance:

Coverage Duration: Permanent life insurance provides lifelong coverage, as long as the premiums are paid.

Premiums: Premiums for permanent life insurance are generally higher compared to term life insurance.

Death Benefit: Permanent life insurance pays out a death benefit whenever the insured person passes away.

Cash Value: Permanent life insurance policies have a cash value component that grows over time. Policyholders can borrow against this cash value or withdraw it, depending on the policy terms.

Investment Component: Permanent life insurance policies may have an investment or savings component, such as whole life insurance or universal life insurance.

Policy Flexibility: Permanent life insurance policies offer more flexibility and customization options, allowing policyholders to adjust coverage amounts and premium payments.

Choosing between term life insurance and permanent life insurance depends on individual circumstances and goals. Term life insurance is often chosen for its affordability and simplicity, while permanent life insurance provides lifelong coverage and potential financial benefits through cash value accumulation. It's advisable to assess your financial needs, budget, and long-term goals before making a decision.

Rammcy Corp is here to help you make the most informed decision for yourself and your loved ones. Headquartered in Mount Kisco, NY, the team at Rammcy Corp has years of experience working with clients to achieve stability on Life Insurance policies in addition to Business, Personal, Home and Auto insurances. Call Rammcy Corp Insurance Professionals at 914-864-0570 or visit rammcycorp.com to request a free quote today!