Term life insurance is a type of life insurance policy that provides coverage for a specific period of time, typically ranging from 10 to 30 years. Premiums for term life insurance are generally lower than those for permanent life insurance, but the policy does not build cash value and coverage ends when the term expires.
Permanent life insurance, such as whole life or universal life, provides coverage for the policyholder's entire lifetime, as long as premiums are paid. These policies often include a savings component, known as cash value, which can accumulate over time and can be borrowed against or used to pay premiums. Permanent life insurance policies typically have higher premiums than term life insurance.
The choice between term and permanent life insurance depends on the individual's specific needs and financial situation.
Term life insurance is generally more beneficial for individuals who have a specific need for coverage over a limited period of time, such as covering a mortgage or providing for dependents during the child-raising years. The premiums for term life insurance are lower than those for permanent life insurance because the policyholder is only paying for coverage during the term of the policy.
Permanent life insurance, such as whole life or universal life, is more beneficial for individuals who want lifelong coverage and the added benefit of cash value accumulation. These policies can provide a source of savings and can be used to supplement retirement income. However, permanent life insurance policies typically have higher premiums than term life insurance policies.
It's recommended to consult with a financial advisor to understand your specific needs and to determine which type of life insurance policy is best for you.
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