Monday, September 24, 2007 1:19 PM
What’s the difference between term and permanent life insurance?
Term life insurance provides coverage
for a certain number of years (typically ten, fifteen, and twenty years) with a
guaranteed level premium. It provides a
death benefit and no cash value.
Permanent life insurance generally
includes any type of life insurance that accrues a cash value and is projected
to stay inforce to a certain age such as 95, 100 or even 125, which should
cover most life expectancies.
Types of
permanent life insurance include whole life, universal life, variable life and
joint second-to-die survivorship life and any combinations of these. The newest kid on the block is Guaranteed
Universal Life, which provides a permanent death benefit and level premium with
minimal, if any cash accumulation.
There are exceptions to these
general categories such as term with a return of premium rider where after a
certain number of years; you receive your premiums back. Of course this type of term insurance has a
higher premium than death benefit only term life insurance.
Tony Steuer, CLU is a specially licensed life insurance analyst and author of Questions and Answers on Life Insurance
Check out his website TonySteuer.com
Buy Tony's book on Amazon.com