Term vs. Permanent Life Insurance

Your decision will be guided by what you want it to accomplish for those you’re protecting and will balance the factors of:

Cost – What you pay for the protection.

Time – How long you will be insured.

Face Value – How much money your beneficiaries receive upon your death.

Cash Value – How much money can be received by withdrawing, borrowing, or cashing in the policy.

Your Murphy Insurance trusted professional will help you determine what makes the most sense based on your overall needs and budget. It may turn out that the best solution for you is a combination of the two types using term insurance to protect for short-term expenses and a permanent insurance policy for long-term concerns. 

Term Life Insurance

• Least expensive life insurance protection since there is no “cash value” component.
• Best for filling a temporary obligation, i.e., mortgage, supporting children until they can become financially independent, college tuition, etc.
• Available in 5, 10, 15, 20 or 30 year “terms”. Get protection for exactly the time you need.
• Level premiums guaranteed not to increase during the term.
• Generally flexible payment schedule monthly, quarterly, semi-annual, or annual.
• Can’t be cancelled as long as you pay your premiums.
• Pays a death benefit to your beneficiaries, which is generally income tax free.
• Can convert some term policies into a permanent policy so use it as a starter for getting the coverage you need now and later convert it so that you can build “cash value” for the future.
• May have the option of guaranteed renewal, which allows you to extend coverage beyond the initial term. The rate may change, but this feature can be very important if you should be come uninsurable during the policy term.

Permanent Life Insurance

• Doesn’t expire and offers lifetime protection.
• Can build tax-deferred cash value depending on how you set up your policy.
• Pays a death benefit to your beneficiaries, which is generally income tax free.
• Ability to access cash value either through withdrawals or loans to help with education, emergencies, or as retirement income supplement.
• Can cancel at any time and receive the current cash
• Option of choosing a “universal life” policy which can provide additional flexibility allowing you to make withdrawals or skip payments as long as the cash value of your account is sufficient to cover the insurance costs. 

Ultimately, the decision between term and permanent life insurance depends on your specific needs and financial goals. If you’re still unsure about which option best suits your situation, don’t hesitate to reach out. Our life insurance professionals can help guide you through the process and ensure you choose the best solution to protect your loved ones and meet your long-term objectives.