February 25th, 2012 | Author: Mitch Reynolds

VIDEO: Renting vs. Owning Your Life Insurance

Term vs. Perm Life Insurance – Which is better?

In this video we discuss term vs. perm life insurance – the age old debate. which type of life insurance is better. Well, I’m not going to answer that question for you since there is a place for both in your insurance and risk planning portfolio. The major differnece, to keep things simple, is one is like renting an apprtment and the other is like buying th ehouse.

Term vs. Perm Life insurance Term life insurance is much cheaper in monthly premiums than buying permanent life insurance. However, it is designed for a short period of time, like 10 or 20 years, to protect you from the financial cost of shorter term things, like paying off the mortgage or the cost of raising children. In the end, if nothing happens to you and you are still alive at the end of the term (or whenever you cancel the policy) the premiums you have paid are like a sunk cost. Very much like renting an appartment. You have the home to live in while you rented it, but when you move out there is no money given back to you by your landlord.

Permanent life insurance is different. With permanent life insurance you are “buying the house”. The cost of buying permanent life insurance is based on how long the life insurance company thinks you are going to live (statistically). This is like amortizing the cost of you life insurance over the rest of your natural life (or you could quick pay the policy in 10 to 20 years by paying even more today). In the end you will actually own the underlying block of money you originally bought as a death benefit – but you insured for the full amount form day 1. Permanent life insurance also has a cash value, which makes it an asset to you. You have equity in the policy. The trade off is that perm life insurance will cost you more than term.

Find out more about Term vs. Perm Life Insurance

Get some advice from one of our brokers at Life Guard Insurance about term vs. perm life insurance, and which type of insurance is right for you.

The video was produced by Life Guard Insurance and posted by +Mitch Reynolds. If you found the video interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this video about term vs. perm life insurance would be very much appreciated.