Is Term or Permanent Life Insurance For You?


Life insurance coverage is a necessity.

Many people don’t know which policy is best for them: term or permanent (also known as whole life, universal life, variable life) insurance.

Major insurance carrier MetLife explains it this way: “Permanent life insurance can be compared to owning a home, while term insurance is like renting one. There are advantages and disadvantages to both.”

Specifically:

Term life insurance will provide coverage for a specified term or number of years. Premiums will remain constant for the term, and at the expiration date the policy can be renewed, but at a higher rate depending on the age of the insured.

Permanent life insurance will provide coverage for the life of the insured. Premiums will remain constant throughout the policy and some of the premiums will accumulate in a tax-deferred account (cash value).

So what are the pros and cons of each?

Term life insurance:

  • Premium payments are initially lower than premiums for permanent

  • Premiums will increase on the renewal date

  • Premiums do not build equity (cash value)

  • Policy will buy more coverage at a lesser premium compared to Permanent

  • Policy is more affordable if funds not available for Permanent

Permanent life insurance:

  • Premium payments are initially higher than premiums for term insurance

  • Premiums stay constant or may even decline

  • Premiums build equity (cash value)

  • Policy can be used to grow money tax-deferred and be used for emergencies, retirement, or college funding

  • Policy is a good estate planning tool

If in doubt about the extent of coverage you have or need, talk to your Certified Financial Planner, financial advisor or insurance agent. Don’t delay in obtaining adequate life insurance. Your dependents are depending on you!

BenefitPerqs is a voluntary employee benefits company. Offerings include MetLife insurance among other employee and individual benefits.

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