From benefit amounts to add-on features and coverage lengths—life insurance companies make different offers and policies shift into many forms. Nevertheless, the two primary kinds of life insurance available can be summarized by a simple comparison. Discover how term vs. permanent life insurance looks to make the most informed, first, and high-level choice about which type of policy is right for you.
To begin with, you should look at several similarities in their payment structure and the guarantee of their benefits. Then, consider the great divide between them when it comes to the monthly premium, the ability to add other features, and the potential for investment options. Understanding all these will mean you’re closer to becoming an expert shopper who’s ready to choose the best policy with smart, accurate quotes.
A Bit of the Same: Purpose, Payment, and Benefits for Term and Whole Life
Insurance policies of all kinds have a shared purpose for you: to safeguard yourself (and often your family) from financial liabilities, tragic accidents, and unexpected events. With this goal, term and permanent insurance have their first similarity. Each is a legitimate way to invest in security, and they both have an expectation in exchange for a promise.
Pay and Be Paid
While you keep the insurance—term or whole—you enter an agreement and contract that asks very simply: pay consistently and promptly. The cost may vary between the plans but the expectation is the same. And, while you may not receive the same number of benefits, you do need to keep the policy active in order to secure the second similarity between the two forms of life insurance.
Primarily, the shared feature of term and permanent policies is their guarantee. When death benefits are guaranteed, it means you don’t need to worry about not having the policy paid out in the event of your death. There are several reasons your policy could be voided, but those concern breaches of your contract terms.
Assuming you keep up your end of the bargain, term and whole life insurance share a major. As long as you pay, they will pay. These may seem like small matters, but it helps to understand that there is no great risk between choosing one over the other when your purpose is simply to protect your loved ones.
Two Great Divides between Term and Permanent Policies
Term policies give you guaranteed death benefits for a monthly premium only for a set time. For 10, 20, 30, or another variable of years, term policies give you a financial net during key periods of life. On the other hand, permanent plans extend indefinitely until the day that benefits need to be activated. Beyond this, let’s consider the two features that stick out in consumer minds most.
Weighing Costs and Benefits
Understanding that term life is time-limited and whole life is permanent, the remaining differences between a period-based policy and an evergreen plan are price and profit potential. By looking at them, you’ll probably fall into one of the two major policy camps and become more ready to get a life insurance quote.
Permanent policies cost much more than term-based coverage because they are certain to pay out on an unlimited timeline and guaranteed death benefits. Pure life insurance can be as much as 15 times higher than a term plan, making it clear why many people choose life insurance plans that expire.
These term insurance contracts give you much lower rates of around $30 per month for the average applicant. Within this plan, the insured can expect a lower, sometimes level premium that gives them peace of mind without the stress and commitment of a high premium for their entire life.
In addition to this, they are distinguished by the number of benefits available. Term policies come with no possibility of true investment features like cash value. Such benefits can accumulate with a whole life insurance plan that the insured can borrow against or improve their benefit amounts through.
Beyond Black and White: Converting Term to Whole Life Insurance
Some get concerned about benefits that end with their insurance policy’s term, but there is the option with some insurers to convert the policy into permanence. This makes the decision much simpler when you need to make important choices about how to insure yourself and give a financial boon to your dependents should anything happen.
Quote Term, Whole, or Term-to-Whole Insurance Policies
Policy-seekers like you sometimes struggle to find and buy the ideal life insurance policy with the best benefits and lowest premium. Online brokers can help by collecting accurate quotes from relevant insurance companies. Get an easy way to compare life and permanent policy quotes with Sproutt.