There are many reasons why you should get life insurance. And you may already be convinced that you should get life insurance in the first place. There are two general kinds of life insurance plan, and you may not know which one to get. In this article, both permanent life insurance and term life insurance plans will be discussed. Using the information on this article, you will gain more insight about what kind of life insurance plan will be best for you, whether that is a term or permanent life insurance plan.
Permanent life insurance is usually the more expensive option when it comes to insurance plans. The premium payments per year are much heftier in comparison to that of a term life insurance. The premium payment also increases for each year that passes. This translates to a larger payment when death occurs. That is because, the funds that were paid to the life insurance plan will accumulate over time. This means a larger amount paid to beneficiaries. The payment received through a permanent life insurance plan also means that it will be tax-free. Payment of taxes on permanent life insurance will be deferred.
Term life insurance is the most basic option when it comes to life insurance plans. The amount of the premium payment is usually much lower than that of a premium life insurance plan. The amount of money that you have to pay per year is also fixed; this means that it will not increase over time like that of a premium insurance plan. we will be ready to help you contact us financial planning melbourne
- Length of time
Like the name suggests, permanent life insurance plans cover you for your whole life permanently. As long as you keep paying the premium per year, you are covered in the event of your death. If death were to occur during any time, your premium insurance plan would cover any eventualities.
For term life insurance plans, you are covered for the specific amount of time that the terms stipulate. This term usually ranges from a period of a few years, typically in 5-year increments. You pay for a plan every year, and it goes on for 5 years. After those 5 years are up, you can choose to renew or extend the plan. This means that when you die, and you die during a period that is not covered by the term life insurance plan, then your beneficiary does not receive any benefits. However, beneficiaries will receive money if your death occurs with the period of the term.
Term life plans are usually not available for those above a certain age. That is because it becomes prohibitively expensive to cover people too old under a term life insurance plan.
There is typically no age limit to those who want to avail of a permanent life insurance plan. Of course, the premiums will become more expensive the older you are.
Now that you know the main differences between a term life insurance plan and permanent life insurance plan, do you know which one you will get? If you do, congratulations you have taken one more step towards sound financial planning.