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We can help you learn more about the differences between term and permanent life insurance, and which might be right for you.
Permanent vs. Term Life Insurance
Typically people choose between the two most common types of life insurance: term life insurance and permanent life insurance. As you’re comparing these two options, it’s important to consider factors like cost and length of coverage. For example, permanent life insurance provides coverage for your entire lifetime as long as you pay your premiums. Alternatively, term life insurance offers coverage for a specific term or period of time, such as 10, 20, or 30 years.When comparing costs, it’s important to consider that the cost of permanent life insurance remains constant throughout the policy's duration, with premiums locked in at the time of purchase, while term life insurance premiums typically increase with each renewal. However, term policies may offer lower rates overall, while permanent life insurance coverage can be more of a financial investment.
Term Life Insurance Rates Explained
Term life insurance policies offer an affordable way to keep your loved ones protected for a set period of time since term policies are typically in effect for 10, 20, or 30 years. Understanding the factors that influence term life insurance rates can help you consider whether this type of policy is a good fit for your specific needs and budget. A variety of factors may impact your term policy rates, including:
- Age: Age is a significant factor in determining term life insurance rates. Generally, the younger you are, the lower your premium will be. As you age, the risk of mortality increases, leading to higher rates.
- Health: Your health condition plays a crucial role in setting your term life insurance rates. Insurers typically require a medical examination or ask detailed health-related questions to assess the risk. Pre-existing medical conditions or a history of tobacco use may result in higher premiums.
- Coverage Amount and Term Length: The amount of coverage you choose and the duration of the policy will impact the rates. Higher coverage amounts and longer terms will generally result in higher premiums.Learn more about term life insurance.
Permanent Life Insurance Rates Explained
If you’re looking for coverage that offers a cash value in addition to a death benefit, you may be more inclined to purchase a permanent life insurance policy. Permanent life insurance premiums go toward both maintaining the policy’s death benefit for the entire duration of your life and building a cash value, which can accrue interest and grow over time. The rates for this coverage are determined by various elements that insurers take into consideration, including the type of permanent insurance policy you choose. Two of the most common types of permanent life insurance include whole life insurance and universal life insurance. Whole life insurance and universal life insurance each have their own rate structures. Whole life insurance typically has higher rates due to its fixed death benefit and guaranteed cash value growth.Learn more about permanent life insurance.
Most Affordable Life Insurance Option For You: Permanent vs. Term Life Insurance
When considering your life insurance options, it’s important to consider your financial goals, family’s needs, and budget to choose the length that works best for you. Here are some factors to take into consideration when choosing between term and permanent life insurance coverage:
Term life insurance might be the right option for you if:
- You’re the primary wage earner for your family and are looking to protect them if the unexpected were to happen and your income was lost.
- You’re a stay-at-home parent, looking to help cover the cost of childcare in the event you would not be around to provide that care.
- You have a mortgage that would need to continue to be paid.
- You have any debts, including credit cards, medical bills, or student loans.
Permanent life insurance might be the right option for you if:
- You have a high net worth and are looking to support your family in paying estate or inheritance taxes if the unexpected were to happen to you.
- You’re the parent or guardian of a special needs child and want to make sure they have the financial resources they need.
- You are looking to provide an inheritance when you pass.
While it may seem overwhelming to consider all of these elements, our experienced team of licensed insurance agents can make the life insurance shopping process quick, easy, and convenient for you. With nearly 40 years of industry experience, we can provide coverage and rate comparisons from some of the most trusted insurance companies in just minutes. Using our proprietary technology, we’ll help you determine the length of coverage you need to find a carrier and policy that’s right for you.
Still have questions? We’re here to help:
Let SelectQuote help you find the right life insurance for your family.
Whether you think you’d be interested in term life insurance or permanent life insurance, we can help you weigh the options and figure out the best fit for your lifestyle and budget. Let us do the heavy lifting as you navigate shopping for coverage. Our licensed insurance agents will keep your loved ones and priorities in mind so you can rest assured you’ll end up with a policy and coverage you can trust.
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