Life insurance is a great way to protect your family if something should happen to you, and may even be a great way to build cash value. If you are looking for life insurance quotes, here is what you need to know about term versus permanent life insurance.
Should you invest in term life insurance or permanent life insurance?
This will depend on your situation. Often you will hear people saying that you should only purchase term insurance because permanent life insurance is a scam or a rip off. Before we get into this, less explore the difference between term and permanent life insurance.
If you compare the life insurance quotes of term versus permanent insurance you will notice that term life is much more affordable. This is because it does not offer any investment growth and because it will only cover you for a specified period of time.
Permanent life insurance, on the other hand, will cover you for the rest of your life and will grow in cash value. Although your life insurance quotes are likely to be higher, much of this is going to provide for the investment component and to allow the insurer to cover you indefinitely.
So what are the reasons people will advise you not to buy permanent life insurance? Often you will hear the slogan “buy term and invest the difference”. This is good advice if you actually follow it. The idea is that as your other investments grow, you will no longer need life insurance to take care of your loved ones if something happens to you. However, many of us will not be disciplined enough to keep investing the difference, especially if the markets go awry.
If the markets do dramatically drop as they did in 2008, you may lose a significant amount of your investments. Whole life insurance, a type of permanent life, helps to protect against this. The whole life insurance quotes price will be for a specific death benefit amount, such as $500,000, and may also include a guaranteed minimum growth rate. So even if the markets do bottom out, your life insurance value will still grow while everyone else is scrambling around trying to get back their losses.
Something you may want to beware of with universal life insurance is that the fees can be pretty steep, which may keep the cash value portion of the insurance from growing for the first few years. This is one more thing that should be a factor when weighing the pros and cons of your various life insurance quotes.