If you have a family, the best thing that you could do to secure their future is to get a life insurance. Now, most people already recognize that life insurance is a critical part of their financial planning, but many fail when it comes to picking the right one. To help you choose the right package, insurance plans can be categorized into two, term and permanent life insurance. Knowing how these two work will help you in making the right decision. Here is a look at the difference of these two types of life insurance.
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Term insurance has an expiry date. For companies like Freedom Life Insurance, the longest term insurance offered is for 30 years. However, you can choose as low as you want, depending on the time that you think you will still be paying your bills. When choosing this type of insurance, it is important to note that, if you do not die within the term, your insurance expires and your beneficiaries will not get the benefits. Therefore, if you are not done paying bills for your kid by the time the insurance expires, then you will need to renew the insurance.
On the upside, this insurance plan allows you to pay minimum premium. However, it could get quite expensive if you have to keep renewing it. Besides, most companies will want you to take a fresh medical test, which might lead to higher rates, not to mention that with age the rates tend to go higher.
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Provided that premiums are paid, permanent insurance should cover you regardless of the time you die. This type of insurance is considered to be more complicated than term insurance and asks for higher rates than in term insurance. However, it does have the advantage of building on cash value. If you get your insurance from companies like Freedom Life Insurance, you can always use your policy as security to borrow a loan or mortgage. But, it is important to note that borrowing cash value will reduce your death benefit.
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