Advantages and Disadvantages of Term and Permanent
Insurance ...
Term Insurance
Advantages:
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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.
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It's good for covering specific needs that will disappear
in time, such as mortgages or car loans.
Disadvantages:
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Premiums increase as you grow older.
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Coverage may terminate at the end of the term or may
become too expensive to continue.
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Generally, the policy doesn't offer cash value or paid-up
insurance.
Permanent Insurance
Advantages:
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As long as the necessary premiums are paid,
protection is guaranteed for your entire life.
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Premium costs can be fixed or flexible to meet
personal financial needs.
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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
paid-up insurance.
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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.)
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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.
Disadvantages:
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