Life insurance is a very important type of insurance for adults especially for the married couple or anyone who has someone that relies on them for finances. With life insurance, you will be assured that in the case of death, your beneficiaries will receive a good amount of money. This could also be used to pay for mortgage and other outstanding debts – freeing those left behind from financial woes.

Consumers are often challenged with which type of life insurance to select. There are two major types of life insurance policies: permanent and term. Each has its own benefits and disadvantages. By carefully considering each life insurance, you will be able to choose one that suite your life insurance needs.
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Term Life Insurance

Simply put, term life insurance is a type of insurance that provides cash for beneficiaries in case of death of the policy holder within the specified time. This type of life insurance is renewable since it can only be used for specific amount of time.

For example, the policy holder does not die within the 20-year period; the policy holder could easily renew that life insurance for another 20 years or less.

This type of life insurance is often cheaper compared to other types of life insurance. Since it is affordable, there is no cash value for this type of life insurance. You are practically paying life insurance so that your beneficiaries will have something in case you die. You will never receive anything but you will save money through this type of life insurance.
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Permanent Life Insurance

If you think you will be living until your golden years, permanent life insurance maybe just for you. This type of life insurance will give you permanent protection – this type of life insurance does not need to be renewed. The premiums that you pay every month could also accumulate and become cash value.

If you reach the point wherein your life insurance has a cash value, you can borrow them or even get them before you die. This is also tax friendly as this would be used for tax cuts.

However, this type of life insurance is a little bit expensive. Aside from being costly, you cannot just decide to cash in your premiums anytime. You may be required to wait at least 10 years before you could actually say there is a cash value in your permanent life insurance.

You have to wait that long since your money will still be used for different investments. The commissions on permanent life insurance are also higher. Sales agents will usually receive an amount equivalent to a year’s worth of premiums. The premiums might also increase over a period of time depending on economic conditions and other factors.
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Comparing Life Insurance Policies

Although term life insurance is an attractive life insurance policy, it does not offer benefits to the policy holder. Permanent life insurance on the other hand, could be treated as a small investment that could be borrowed or cashed-in in the future. Although the premium is a little bit expensive, you will be assured that money is available for you and your beneficiaries after the determined number of years.