And Now You Know

A lot of people resolve to really get their acts together once the new year arrives. It’s important to have everything in order because… well… you just never know do you? One of the things that I’ve found confusing is life insurance: permanent vs. term, specifically. There are a lot of places online that you can visit for term life insurance quotes, and permanent life insurance quotes as well. But what does it all mean? In a nutshell:

Term Life Insurance: These policies offer death benefits only, so if you die you win (so to speak). If you live past the length of the policy, you (or, more specifically, your family members) get no money back. They are, however, generally less expensive.

Permanent Life Insurance: Permanent life policies offer death benefits and a “savings account” (also called “cash value”) so that if you live, you get back at least some of, and often much more than, the amount you spent on your premium. You get this money back either by cashing in the policy or by borrowing against it. These policies are more expensive.

Of course, that is an oversimplified explanation. Each type of policy has its nuances and you really need to examine which kind is right for you. But just in case you were as confused as I was, hopefully it makes at least a little more sense now.

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