Advantages and Disadvantages of Term and Permanent
Initially, premiums are generally 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.
It's good for covering specific needs that will disappear
in time, such as mortgages or car loans.
Premiums increase as you grow older.
Coverage may terminate at the end of the term or may
become too expensive to continue.
Generally, the policy doesn't offer cash value or paid-up
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. (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 provide
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 for a specific period of time.)
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.
Required premium levels may make it hard to buy
It may be more costly than term insurance if you
don't keep it long enough.