Choosing Term Insurance or Whole Life Insurance

What product do you choose. What is really the best choice for you? What does you budget allow? Many Americans choose Term insurance. Term insurance is a great choice in many situations, but you may find permanent life insurance is a better fit. Why? Well, let’s look at this from an actuarial approach. Today’s medical advances mean you have a good chance of living beyond the term period. Let’s look at some numbers:

Take a 30 year old male on a 20 year Term Insurance policy: There is a 98.8% chance he will live beyond the policy term period. The Number moves to a 99.1% chance for a female same age. This means that the premium increase is inevitable at this point. In the perspective of your dollar investment, there is not much bang for your buck.

Permanent Insurance: 

There are 3 things you need to know about permanent insurance.

Protection: Your insurance will be there to protect your loved ones with a death benefit for life as long as the policy is in force. With term insurance, you have a death benefit for your selected period. But when that period is over, your premiums that were level for the term period, usually become significantly higher to keep coverage. Many choose to discontinue their coverage.

Potential: Permanent insurance can provide additional cash value and opportunities to earn dividends which can be available to you during the life of your policy. You have the flexibility to help meet other needs in like college education, retirement, real estate, etc.

Premium: Permanent insurance means as long as you pay your premiums, they’re guaranteed premiums for life or for 10 years, 20 years, 65 years. Not so much with term insurance, where premiums increase as you age and when your health begins to change, especially if you are applying for coverage.

Ultimately, it is based on your goals and visions. Life insurance is not a religion, it is a financial tool.

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