If you’re looking to buy individual life insurance, you should be aware that there are two general types available. An LA insurance company will sell you either term insurance or permanent insurance. If you don’t know the difference, you’re in the majority. To find out which type you’d like to purchase, read on to learn the differences between them.
What Is Permanent or Whole Life Insurance?
Whole life insurance is just what it sounds like – it pays out whenever you die, no matter how old you are. With traditional whole life insurance, your premium will remain the same throughout the life of the policy. Because the cost of each $1,000 of benefit will increase as you get older, your insurance agent will charge you more at the beginning of the policy to offset the cost difference as you age. If you decide to cancel your policy, you can get your overpayment back as cash value.
What Is Term Life Insurance?
Term life insurance lasts between one and 30 years. If you die during this time, your family will receive your death benefit. Pay attention to your policy though. If you buy decreasing term insurance from an LA insurance company, the death benefit will drop every year over the course of the policy. However, level term insurance will pay the same no matter when you die over those same years.
When buying life insurance, you should be aware of the various types available. Ask your insurance agent what would work best for you and your family.