Life insurance is meant to ease your mind by helping your family members financially in the event of your death. You can get either permanent coverage or a term policy if you think you need life insurance. When comparing life insurance plans, it is important to remember that each option has advantages and disadvantages.
Term life insurance seems more cost-effective than permanent insurance in the short term, but it expires after the policyholder reaches the end of their specified term. Although the premiums for permanent life insurance Houston tend to be higher, they are guaranteed to remain level throughout the policyholder’s lifetime.
Your family will be better served by a policy and amount of coverage tailored to their specific needs, so it’s important to know the distinctions between permanent and term life insurance. On that note, let’s take a detailed look into the two types of life insurance.
Term Life Insurance
Term life insurance plans often last for ten, twenty, or thirty years before they expire. When purchasing life insurance, in addition to deciding on a policy’s duration, you’ll also choose a death benefit or the sum paid out to your beneficiaries upon your passing.
Most professionals advise looking at your insurance plan a year or two before it expires. That way, you can take a step back and consider your alternatives. You may be able to extend your current term life insurance plan or switch to permanent coverage with certain providers.
You can also allow your plan to expire, which will result in the termination of your coverage, the termination of your premium payments, and the cancellation of any potential death benefit to your intended recipients. What’s the point in buying term life insurance if it’s going to be ineffective after a specific amount of time has passed?
In most cases, term life insurance plans can save you much money compared to permanent ones. Many people only need life insurance at specific stages of their lives, like while their kids are young. Consider a return-of-premium plan or another type of term life coverage if you’re concerned about making premium payments on an insurance plan that will eventually lapse.
Permanent Life Insurance
Coverage under a permanent life insurance plan continues without interruption for the policyholder’s whole life. If you settle your premiums on time, your beneficiaries will get your death benefit regardless of the cause of your death. Although the cost of a permanent life insurance policy is much higher than a term life insurance policy, it could prove worthwhile for those who require permanent protection.
A cash value aspect is typically included in permanent life insurance plans but not in term life insurance. Your premium payments will be deposited into an investment or savings account, where they will accumulate return or interest over time.
Once the cash value fund reaches a particular level, premiums can be paid from that account instead of from your fund. Borrowing funds against the account is also possible, with the cash value serving as collateral. Three primary forms of permanent life coverage exist:
Whole Life Insurance
With the cash value feature, you can acquire permanent life insurance and a savings account. The cash value of your policy will accumulate interest.
Universal Life Insurance
This policy provides you with both permanent life insurance and a cash value aspect that earns interest dependent on the profitability of your investments. Likewise, the death benefit on your policy can still be modified.
Variable Life Insurance
This option offers the most leeway while also posing the greatest risk. This policy provides you with perpetual life insurance and the flexibility to invest the cash value aspect as you see fit. Problems arise when your investments underperform and you incur losses that reduce your death benefit.
Which One Is The Best Option?
However, while term and permanent policies account for most life insurance policies, they are certainly not your only choices. Perhaps you’re considering purchasing final expense life insurance to pay for your burial or cremation. You should look into your options for life insurance thoroughly before settling on one.
If you’re looking for a reliable life insurance company Houston Texas, then Franklin Life & Annuity is your best bet. We offer comprehensive life insurance policies, such as final expense life insurance and family life insurance in Houston. Contact us today, and we’ll help you get the policy you need!