Which is Better For You: Term or Permanent Online Life Insurance?

Pros and cons of term life insurance. Term life insurance can be a good fit for younger individuals and families, who need protection against the loss of income of a primary earner for a stated period of time, at an affordable cost. In most cases, a medical examination will be required.

Term life insurance does not build cash value, so at the end of the term, the policy will have no value.

An additional benefit of term life insurance is that it is a simple product, so comparison shopping is quite easy. The market for selling term life insurance is competitive, presenting life insurance good values for consumers.

Brant Steck, director of client relationships for Brokerage Unlimited, Inc., in St. Louis, recommends buying a life insurance level term life insurance policy and matching the life insurance length of the level premium period to the amount of time the need exists. At the end of the level-premium period, the policy should not automatically cancel (unless instructed by the policy owner), but the premium will likely increase quite markedly if you elect to continue the coverage. You should consider a life insurance term policy with a conversion privilege, which will permit you to convert the policy into permanent life insurance, without proof of insurability, and lock in the rate class you had life insurance at the inception of the policy.

For many consumers, the only way they can afford the coverage they need, for the time when they need it, is through term life insurance. For those people, it’s the life insurance product of choice. Jeremy Ragsdale, vice president, Life Insurance and Annuities at TIAA-CREF, notes that more than 85 percent of the policies life insurance sold by TIAA-CREF are term policies, although they represent a much life insurance lower percentage of total premiums.

Pros and cons of permanent life insurance. Permanent life insurance may provide protection for your entire life insurance. If a guaranteed level premium is important to you, make sure your life insurance policy provides for one.

Who should consider permanent insurance? According to independent life insurance consultant Glenn Daily, permanent life insurance can make sense for consumers who need to create liquidity in order to pay projected federal estate taxes. He also recommends permanent life insurance to those concerned about asset protection, where state law provides that the cash value and death benefits of life insurance policies are not subject to claims by creditors.

Permanent life insurance also has an element of forced savings that can be attractive. In this environment of low interest rates, Daily notes that some policies have been paying a tax-deferred return of 4 percent or more. Of course, mortality and administrative costs of the policy will still be deducted life insurance.