Life insurance provides a substantial benefit payment to your beneficiaries at the time of your death. The benefit payment can be used to pay for anything, making life insurance a good option for replacing your income after death. There are two primary types of life insurance: term life insurance and permanent life insurance. Often, people don’t understand the difference between term life insurance vs. permanent life insurance. They each have different rules, which we will discuss in the following sections. 

What Is Term Life Insurance?

Term life insurance is commonly known as pure life insurance. It is a type of life insurance that guarantees a specific death benefit payment if the insured dies within a specified timeframe. Once that period is over, the policyholder has the option to renew their coverage or allow their policy to terminate. Some policies also give policyholders the option to convert their term life insurance policy to a permanent plan. 

What Is Permanent Life Insurance?

Permanent life insurance coverage provides policyholders with life insurance that does not expire. The plans last for the insured’s entire lifetime, making them a great long-term option. In most cases, permanent life insurance plans also include a cash savings portion that builds value over time. 

There are two types of permanent life insurance; whole life insurance and universal life insurance. Here’s what each type of insurance offers:

Whole Life Insurance 

Whole life insurance covers the policyholder for their entire lifetime. It also has a savings component that grows at a guaranteed rate. The savings portion does not grow based on market performance. 

Universal Life Insurance 

Similar to whole life insurance, universal life insurance covers the insured for their entire lifetime and has a savings component. The savings component of universal life insurance grows based on market performance. There are also different premium structures available to universal life insurance policyholders. 

What Is a Death Benefit?

The death benefit is the payment provided to your beneficiaries when the insured person passes away. You can choose who receives the money when you sign your insurance contract. If you want to change your beneficiaries, you may need to notify your other beneficiaries before doing so. 

Find Life Insurance Today

Sometimes it isn’t easy to find life insurance at an acceptable rate. Magnolia Insurance Agency can help you with your search. We understand the difference between term life insurance vs. permanent life insurance. To get started with a free quote on qualifying coverage in your area, please give us a call at 770-213-5171.

Life Insurance / By Magnolia Insurance Agency