Terms of Use:
Term Insurance
Advantages
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Initial premiums are generally much lower than those for permanent insurance, allowing you to buy higher levels of coverage at a younger age when the need for protection often is greatest.
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It's good for covering needs that will disappear in time, such as mortgages or car loans.
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You can lock in term rates for a specific period of time, usually between 1 and 20 years.
Disadvantages
- Coverage may terminate at the end of the term or become too expensive to continue.
Permanent Insurance
Advantages
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As long as the premiums are paid, protection is guaranteed for life.
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Premium costs can be fixed or flexible to meet personal financial needs.
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The policy accumulates a cash value against which you can borrow. (Loans must be paid back with interest or your beneficiaries will receive a reduced death benefit.) You can borrow against the policy's cash value to pay premiums or use the cash value to provide paid-up insurance.
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The policy's cash value can be surrendered -- in total or in part -- for cash or converted into an annuity. (An annuity is an insurance product that provides an income for a person's lifetime or a specified period.)
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A provision or "rider" can be added to a policy that gives you the option to purchase additional insurance without taking a medical exam or having to furnish evidence of insurability.
Disadvantages
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Generally much more expensive than Term insurance.
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Required premium levels may make it hard to buy enough protection.
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The return on investment is generally much lower than what is possible through alternative investments, but it is a very low risk investment.
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