While many life insurance policies exist, there are two main types of policies. Your first decision when purchasing a policy is to choose whether you wish to buy term or permanent life insurance. But what’s the difference between these types of coverage?

Term Life Insurance Policy

Many industry professionals consider term life insurance to be a temporary solution—whether you only own the one policy or you purchase it on top of a permanent life insurance policy for additional coverage during times of need. With term life insurance, you pay for coverage for a predetermined period of time—often 10, 20 or 30 years—and benefits are paid to your dependents only if you die within this term.

When your term is over, you may have the option to renew your coverage, albeit with a higher rate. This is because you become a higher risk as you age, particularly if you develop health issues. If term life insurance is your preference, it’s recommended that you purchase coverage at a young age and with a long term so you can lock in the lower rate for a longer period of time. Many people are able to purchase term life insurance with a monthly premium that costs less than their cell phone bill.

Permanent Life Insurance Policy

Where term life insurance is more of a temporary policy, permanent life insurance is designed to last for the remainder of your life (so long as you continue making premium payments). Even if your health wanes as you age, your coverage cannot be dropped or cancelled. Many permanent life insurance policies double as an investment tool because they build cash value that you can borrow against to fund big life events, such as buying a new home or suffering an illness. Because this coverage is more comprehensive and lasts longer, you can expect to pay more than you would for term life insurance.

Which policy is right for you? Contact your independent insurance agent for more detailed information and price quotes.

We’re here to help you get started. Call Heritage Insurance at 712-652-3344 for more information on life insurance.