What is the Difference Between Term and Permanent Life Insurance?

Life insurance is not a requirement from the state of Texas, though it is a provision that many people seek out, because it can help absorb expenses related to funerals. In addition, when a person is responsible for meeting others’ financial needs, life insurance can help offset the loss of income that impacts a family when that person dies. 

Term and Permanent Life Insurance

Term life, essentially, is a policy that is written to last for a set period of time. It is based upon the likelihood that the insured will or won’t die within 10, 20, or 30 years and is priced accordingly. Term life is typically less expensive than permanent, and after the term has expired, the cost will generally increase significantly, making it unaffordable for most people at that point. It is important to remember that a policy is actually a contract between someone or something, such as a trust, and the insurance company. 

Permanent life insurance carries the same death benefit component but also provides a means of savings, referred to as a ‘cash value’, and it is divided into three categories. Whole life typically has investment instruments, such as bonds or CDs, and Variable life tends to delve into investments like mutual funds. For individuals with a high net worth and who need to plan for their business assets, Universal life entails estate planning with a view to saving on taxes as well. 

Ty Lawrence Insurance Agency Serves Austin, TX Residents

At Ty Lawrence Insurance Agency, we aim to provide our clients with superior service and attention to their insurance needs. We have faithfully served the Austin, TX area and look forward to working with you. Reach out to us, and we can discuss any questions you may have regarding homeowners, commercial, automobile, or life insurance today!