What are the advantages and disadvantages of term and permanent insurance?
Term Insurance Advantages • Initially, premiums are generally lower than those for permanent insurance. • It’s good for covering specific needs that will disappear in time. Disadvantages • Premiums increase as you grow older. • Coverage may terminate at the end of the term or may become too expensive to continue. Permanent Insurance Advantages • As long as the necessary premiums are paid, protection is guaranteed for your entire life. • Premium costs can be fixed or flexible to meet personal financial needs. • Policy accumulates a cash value that you can borrow against. • The policy’s cash value can be surrendered in total or in part for cash or converted into an annuity. Disadvantages • Required premium levels may make it hard to buy enough protection.
