What are the differences between term and permanent life insurance?

by DK Insurance Insurance broker • Insurance Agent • Financial ser

Life insurance products are plentiful. While the array of choices is quite impressive, there are mainly two types of coverage. On the one hand, there is temporary protection, and on the other, there is permanent protection. But do you know what the differences are between term life insurance and permanent life insurance? Let's look at this together.

Term and permanent life insurance: an overview of the differences

First, as the name suggests, permanent life insurance is designed to stay in place for the rest of your life. This is a policy that offers a death benefit, but which can also serve as an investment vehicle, because certain permanent products have a component dedicated to investment, this is particularly the case of universal life insurance. .

As for Term Life Insurance in Brampton, it is presented more as a short-term financial safety net with a duration varying between five and thirty years. Once the expiry has come, you must renew your contract so that the protection remains active or you can also convert it into permanent life insurance. Usually, insurance premiums for temporary coverage are lower than for permanent coverage.

Who are these two distinct protections intended for?

The life insurance, whether temporary or permanent, offer ideal protection when it comes to deal with the financial consequences of death. More specifically, and in the opinion of many, young families, homeowners with mortgages and contractors benefit the most from temporary protections.

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At the same time, people who already make full use of their registered investment accounts, such as RRSPs and TFSAs, and who want long-term insurance, have a profile that more closely matches that of permanent insurance, as these products cleverly combine protection and growth in cash value. Whatever your situation, is it important to choose a life insurance policy that matches your needs?

The advantages and disadvantages of these covers

Because it offers more affordable premiums, term life insurance is cheaper than permanent life insurance. It is also easier to understand. However, since it is temporary, this indicates that your protection will eventually end if you do not renew it. In addition, if you renew it, the premiums will be higher. Conversely, permanent life insurance has the advantage of being guaranteed for life, even if your state of health deteriorates over time. Its cost is also fixed and will never increase.

How to take advantage of the differences between term and permanent life insurance?

If you need temporary coverage, even while your mortgage is paid off or your children are financially independent, term life insurance is recommended. On the other hand, if you want a product with a view to building up a wealth, which you will bequeath to your heirs or to any other entity, permanent life insurance is for you.

Choosing the right life insurance policy doesn't require a thorough review of your current and future needs. To do this, do not hesitate to contact DK Insurance. Its financial advisors will be happy to assess your situation and guide you to the life insurance that is right for you.

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