Permanent Life Insurance Vs. Term Life Insurance
As the name implies permanents life insurance covers the entire life. It remains in force till the policy matures or pays out, or the owner stops paying the premium or on death of the insured. This type of insurance has a cash value. This cash value is accessible to the owner of the policy NOT the insured. This money can be withdrawn or a loan taken from or on surrendering the policy receives the surrender value. There are two types of permanent life insurances. Whole life insurance and universal life insurance.
Whole life insurance. It has a level premium and a cash value table in the policy. There are death benefits, fixed premiums, guaranteed cash values. Mortality and expense charges do not reduce the cash value. However it is inflexible and the internal rate of return is not competitive.
Term life insurance is a temporary type of life insurance. This provides cover for a limited period. This type has no cash value that is on the death of the insured; the beneficiary will get death benefits like funeral cost, death cost and replacement of wages of the insured. However if the insured does not die within the insurance period, the owner of the policy will get nothing in return that is there is no cash value. This is the cheapest of the life insurances. Term life insurance has given birth to the phrase "buy term and invest the difference". That is buy a term life insurance rather than a permanent life insurance which is costlier and invest the difference between the permanent life insurance and the term life insurance to make profit. Term life insurance is considered profitable and cheap life insurance.
As the name implies permanents life insurance covers the entire life. It remains in force till the policy matures or pays out, or the owner stops paying the premium or on death of the insured. This type of insurance has a cash value. This cash value is accessible to the owner of the policy NOT the insured. This money can be withdrawn or a loan taken from or on surrendering the policy receives the surrender value. There are two types of permanent life insurances. Whole life insurance and universal life insurance.
Whole life insurance. It has a level premium and a cash value table in the policy. There are death benefits, fixed premiums, guaranteed cash values. Mortality and expense charges do not reduce the cash value. However it is inflexible and the internal rate of return is not competitive.
Term life insurance is a temporary type of life insurance. This provides cover for a limited period. This type has no cash value that is on the death of the insured; the beneficiary will get death benefits like funeral cost, death cost and replacement of wages of the insured. However if the insured does not die within the insurance period, the owner of the policy will get nothing in return that is there is no cash value. This is the cheapest of the life insurances. Term life insurance has given birth to the phrase "buy term and invest the difference". That is buy a term life insurance rather than a permanent life insurance which is costlier and invest the difference between the permanent life insurance and the term life insurance to make profit. Term life insurance is considered profitable and cheap life insurance.
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