Skip to Secondary Navigation Skip to Main Content

Current Beehive

SacramentoChange

in this section

  • Understanding the Difference

Sponsored by:

Understanding the Difference

Term insurance
Term insurance enables you to buy insurance for a certain number of years (usually 10 to 30) at a certain price (called "a premium"), which you pay each year.

If you die during this time, the value of your life insurance will go to your "beneficiaries" (usually your family, but you get to decide exactly who when you buy your policy). But if you are still alive at the end of the term, or if you cancel your policy, no benefits will be paid to you or your family.

There are a number of different kinds of term insurance including renewable term, convertible term, level term, and decreasing term. You should talk with an insurance agent about the advantages and disadvantages of each and which is right for you.

Permanent insurance
Permanent insurance allows you to buy insurance at a specific premium for as long as you want. As with term insurance, if you die the benefits of your policy will go to your beneficiaries.

But with permanent insurance, you also build "cash value." This cash value means that you if cancel your policy before you die, the insurance company will still you give you money back (an amount called the "surrender value"). For this reason, permanent insurance is actually a way to save money for the future as well as protect your family financially.

You can also withdraw part of the cash value without canceling the account or use the cash value to pay your premiums (permanent insurance can actually begin to pay for itself). And if you need a loan, you can borrow money using your insurance policy as collateral.

There are a number of different kinds of permanent insurance including whole life, universal life and variable life. You should talk with an insurance agent about the advantages and disadvantages of each and which is best for you.

More information
For a more complete description of all these kinds of insurance online, you can learn more at Insure.com
or the Insurance Information Institute.

How much life insurance do you need and how much does it cost?

Which insurance is right for you?

0
No votes yet
Your rating: None