Term vs Permanent Life Insurance
There are many different types of life insurance. The two main ones are term and permanent. Permanent is meant to last for your whole life and Term is meant to cover you for a specified number of years.
Permanent Life Insurance
Permanent policies allow for cash value to accumulate through dividends paid by the insurance company based on current interest rates and other market factors.
There are different types of permanent policies such as Guaranteed Universal Life, Variable Universal Life and Indexed Universal Life.The differences between these policies basically comes down to how the money is invested.
The important thing to understand in preparing to meet with an agent is not the distinctions between the different types of permanent policies, but whether you want a Permanent policy or a Term policy.
Generally speaking, Term policies are less costly because if you outlive the term they are worth nothing. So their principal purpose is to provide a life insurance benefit to your heirs if you die sooner rather than later. Someone who wants to leave a cash payment to beneficiaries if they should get hit by the proverbial truck within the next couple of years should consider a term policy. You are basically betting against your own longevity.
With a Term policy, when the term ends and you are still around, the premiums to renew it,
if you can do so at all, may be prohibitive.
On the other hand, if you want to provide some additional cash to your beneficiaries whether you get hit by the truck next week or you live to be a hundred, you probably are better off with a Permanent policy.