Both term and permanent life insurance are sound life insurance products for obtaining death benefit protection. Yet over time, permanent life insurance coverage can offer greater long-term advantages to you and your loved ones.
At first, term life insurance is less expensive than permanent life insurance coverage. But term life insurance premiums are based on the insured’s age at renewal and will increase over time.
If an individual stops paying for term life insurance, his coverage will cease.
A good time to look at your term coverage is on an annual basis. Two questions to ask yourself are:
• Is it more affordable now to convert to permanent life insurance?
• Will it be affordable for me to purchase permanent life insurance in ten years?
Many families chip away at their term life insurance coverage and replace it with permanent life insurance as their incomes increase.
Permanent life insurance offers several advantages not found in a term life insurance contract.
If your need for death benefit protection will remain the same or increase in the future, permanent life insurance may be the better choice. Most permanent life insurance plans build a cash value. This cash value is a cash accumulation in the life insurance contract that usually increases through the years on a tax-deferred basis under current tax laws.
Some people draw on the cash value during emergencies. Others use the cash value to help supplement retirement income.
Gregory A. Boyce is a registered representative. Securities offered through MWA Financial Services Inc., a wholly owned subsidiary of Modern Woodmen of America, 1701 1st Avenue, Rock Island, IL 61201, 309-558-3100. Member: NASD, SIPC.