Term or Permanent Life Insurance?

Question

If somebody purchases a home and wants to make sure the mortgage gets paid off if they died pre maturely, do you think permanent or term life insurance would be the better fit? Or both?

Cameron Moore · Answer

If your primary concern is ensuring that your mortgage gets paid off in the event of premature death, term life insurance is likely the better fit. It provides coverage for a specified period, aligning with the mortgage duration, and is generally more affordable.

However, if you're looking for lifelong coverage and see value in an investment component, permanent life insurance might be worth considering. Some individuals opt for a combination of both, with a larger term policy for specific needs like the mortgage and a smaller permanent policy for lifelong coverage and cash accumulation.  Ultimately, the choice depends on your budget, financial goals, and individual circumstances.

Owen Rosen · Answer

this is overly simplistic - life insurance is a valuable estate planning tool among other reasons - every situation is different

Travis Timmons · Answer

Term and only term. Insurance is an expense to mitigate risk, not an investment vehicle.

Dmitriy Fomichenko · Answer

@Christopher Penaflor,

Term insurance is all you need. You don't need life insurance for your whole life if you plan correctly. If you think you need life insurance in your golden years, this indicates failing to plan correctly.

Henry Clark · Answer

Your background says you’re a financial planner and an insurance agent.  Recommend you change firms and business model.

Term.

Recommend they break the coverage up.  We have 3 term policies for the same amount for the same period.   We have 3 separate projects or revenue streams.  As the risk falls off for one, we can drop a policy.  If you were to do one policy, to reduce coverage you would have to cancel then requalify.  Both your age and health may have changed.

Example.  We develop a location and it takes us 4 years to get to positive cashflow.  If anytime I die during that process and my wife decides to sale.  We could lose 50% of the value.   Insurance cash will take the pressure off.

They have a greater chance of divorcing, moving and having to resale at a loss or losing their job and income.

Shenell Caldeira · Answer

Definitely all depends on the clients and what their current situation is and their goals.

Peter Mckernan · Answer

I second a lot of these comments: term life insurance.

Dmitriy Fomichenko · Answer

@Christopher Penaflor

Insurance agents will try to make is complicated for you, but you should never forget the KISS Principle. Here is the definition:

KISS, an acronym for "Keep it simple, stupid!", is a design principle first noted by the U.S. Navy in 1960. First seen partly in American English by at least 1938, the KISS principle states that most systems work best if they are kept simple rather than made complicated; therefore, simplicity should be a key goal in design, and unnecessary complexity should be avoided.

Steven Wesolowski · Answer

Both provide coverage should something were to ever happen to you and are designable to provide best amount for your debts, expenses, goals, etc. Term soley focuses on protection, and depending on the provisions provided by the company, there are term policies that can convert into whole life throughout the policy's coverage period (Yes, they are out there).

Whole life, and thisbis my opinion, is one of, if not, the greatest savings strategy and tax advantage vehicle in our nation'a history. It can provide coverage and can transform into a dependable emergency fund over time, and even serve as loan for the future when it matures over the course of its policy design.

It's always good stategize and determine how much maximum premium you can put into a cash value policy without it turning into a 401k, and just serving as a dependable cash reserve --asset.

And, of course, there are so many variations of these products. Having both depends on your total expenses and situation. Talk to a life insurance agent for your current situation.

Term or Permanent Life Insurance?

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