Types of Life Insurance
TERM LIFE INSURANCE: provides coverage for a specific period of time. Policies can often be renewed at the end of the term, which can last from one to 30 years.
- Lower premiums, allowing you to buy greater protection when you are younger and the need is greatest.
- Provide protection for a specific expense that will end over time, such as mortgage payments.
- Premiums usually increase as you age.
- Some policies cannot be renewed; others might become too expensive to keep.
- Policies generally don't offer a cash value.
PERMANENT LIFE INSURANCE: offers lifetime protection as long as the premiums are paid. There are several types of permanent life offering various features. For instance, premiums can either be fixed or flexible. Some permanent life premiums can be invested in stocks or bonds.
- Premiums can be fixed or flexible.
- Policy accumulates a cash value against which you can borrow. (To avoid reduced death benefits for your survivors, you must repay loans with interest.)
- You can surrender part, or all, of the policy and receive the cash value, or convert it into an income-producing annuity.
- You may be able to buy added insurance without taking a medical exam.
- Premiums may be expensive.
- It may cost more than term insurance if you don't keep the policy long enough.