10 Difference Between Permanent And Term Life Insurance

1. Term life insurance: Temporary protection from the financial impact of death. Permanent Life Insurance: Lifelong protection from the financial impact of death. 2. Term life insurance is the easiest to understand. Permanent insurance is more complex. 3. Permanent life insurance is substantially more expensive. 4. Term life insurance: Becomes more expensive as you age, especially after age 50. Permanent Life Insurance: Initially has more expensive premiums than term life insurance, but can potentially save you money over the life of the policy if in force for a considerable number of years. 5. If you can’t afford a high monthly premium. In that case, a term life policy may make the most sense. If you want to broaden your investments, a universal or variable life policy may offer the returns you’re looking for. 6. If you’re interested in a death benefit that won’t expire and want the ability to accumulate cash value, consider permanent life insurance. Term insurance does not accumulate cash value because it doesn’t have a savings component. 7. You should not consider permanent life insurance until you have substantial emergency reserves, all revolving debt paid off, education fully funded and money in the bank for large future purchases. 8. Who is it for, mainly? Term life insurance: Young families and homeowners with a mortgage. Business owners. Permanent life insurance: Adults with a long-term perspective. People who already make full use of registered investment accounts such as RRSPs and TFSAs.