When you start considering life insurance, you’ll have some important decisions to make. There are two different types of this specialized insurance: term and permanent coverage. Neither is outright better than the other; their appeal varies with the specifics of your situation and needs. Here’s what you should know about their differences so you can make a more informed decision.

Term Coverage

Term life insurance is a shorter and more affordable alternative to permanent coverage. You choose your policy, which has a coverage amount and a “term,” which can range between 5 and 25 years.

The premiums you’ll pay will be less expensive than for permanent insurance, but you won’t accrue potential savings with your payments. If the term runs out during your lifetime, you’ll need to start a new one.

In some cases, you may be able to change it into a permanent insurance policy. If the policyholder dies during the term, the full amount will be paid out.

Permanent Coverage

A permanent life insurance policy will exist, no matter what, for the duration of your life. Your premiums will usually be higher than a term agreement, though you’ll also be rewarded with a growing “cash value.” As you make your payments, that number will increase, allowing you to borrow against it or even cash out if circumstances change.

There are three different types of permanent coverage. Whole insurance works by keeping premiums constant over time, helping you accumulate that cash value. With universal insurance, you can maneuver a little more, taking out some cash or borrowing against it.

There are also variable policies that give you more control over how you invest your money. They tend to be riskier but can also have a high reward if you predict the market correctly. 

If you’re on the lookout for a high-quality life insurance policy, don’t hesitate to reach out to Reid Insurance Group in Lovington, NM. Serving the community for almost seven decades, the professionals maintain licenses in property & causality insurance, and they take classes to stay up to date on any developments in the law. To begin a conversation about your potential insurance policy, call (575) 396-3645. Learn more about the company by visiting their website.