Term assurance and permanent assurance are two basic types of life assurance. Term life assurance is temporary, and it covers only a specific period of time called the relevant term. Permanent life assurance is the type of assurance where the policy is for the life of the insured and the payout is assured at the end of the policy. Term life assurance builds on cash value while permanent life assurance accrues cash value.
Now let's look at the pros and cons for term life assurance and permanent life assurance.
Term assurance has two advantages. First, its initial premiums are usually lower than the initial premiums of permanent assurance. Secondly, term assurance is better for covering needs such as loans or mortgages, which will disappear in time.
There are a few disadvantages in term life assurance: Coverage might become too expensive to keep or terminate at the end of the term. Also, the premiums increase with ages. Besides, paid-up assurance and cash value are usually not offered.
The advantages of permanent assurance are as follow: You get a guaranteed protection for life as long as you have paid the premiums. Secondly, a cash value is accumulated with the policy and you can borrow from it. Thirdly, you can choose to set the premium costs whether fixed or flexible depending on your needs. Besides, a permanent assurance policy's cash value can be surrendered for cash value. In addition, you can add a provision to the policy for the option of purchasing additional assurance without having to providing evidence of insurability.
There are a couple of disadvantages in permanent life assurance. First of all, the required premium levels might make buying enough protection harder. Also, if not kept long enough, permanent life assurance might be more costly than term life assurance.
About The Author
Bill Walker is a freelance writer. He has written assurance related articles for websites such as assurance Guide ( http://assurance-guide.netfirms.com )