Life Insurance Quotes

Purchasing term or permanent life insurance

08/10/11

There are a number of different types of life insurance policies available to people in today's market. A recent Bankrate.com article highlights some of the key differences between two popular forms of life insurance, term and permanent policies.

Term life insurance provides coverage at a fixed rate of payments for a specified and limited amount of time. People generally spend considerably less on term policies, but there are associated risks. Perhaps the biggest drawback of term policies is that if a policyholder outlives the length of his or her policy, there is no refund. Furthermore, once a term policy has expired, people must choose to either let their coverage cease or purchase a new policy.

Permanent life insurance comes in three varieties - whole, universal and variable. All of these types of policies are more of an investment and last for an individual's entire life. They each have a face and cash value. The face value is the death benefit, which usually reaches maturity when the policyholder turns 100. The cash value is the investment amount that grows on a tax-deferred basis.

The American Council of Life Insurers reports that Americans purchased $3 trillion of new life insurance policies in 2009, a three percent decrease from 2008. The overall coverage of the United States in 2009 was $18.1 trillion, a five percent decrease from 2008.

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