The battle over term versus permanent life insurance need not be a battle at all. Both can co-exist in the insurance world, because there are appropriate uses for both of them. Term insurance provides coverage for a specific period, such as 10, 15 or 20 years, and is renewable after those terms are up. Permanent insurance, which includes whole band universal life, is designed to provide lifelong financial protection as long as the policy is in force. Term insurance is like renting an apartment. You pay for your rent, but never really own the place. With term life insurance, you pay your premiums for a set period of time and are covered in the result of an untimely demise only during this period. Term insurance is the go-to option for many young couples and families, since it’s relatively inexpensive. During this phase in their lives, when they are first faced with mortgage payments, saving for kids’ education, retirement savings and other expenses, many families need a large amount of insurance at a low cost. This is where term insurance is a great solution for their needs. Permanent insurance is like owning your home. It’s not just about meeting an immediate need — it’s also about investing in the long run and in your future. It’s more expensive, but you’re building an “equity” with every monthly payment you make. This type of protection can last for the rest of your life, without the need for renewal and with no expiry date, and there’s also the option for “money back” if you no longer need the insurance. Permanent insurance can be used for tax-advantaged growth of funds that can be accessed to pay for your children’s education, supplement your retirement income, etc. Which type of life insurance is best for you? Education is key. Be aware that a term life policy will solve your current problem, but your needs must be reviewed regularly to make sure your families remain well-protected.
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