Protecting your financial future goes beyond just covering immediate needs; it’s about ensuring long-term security for you and your loved ones.
While term life insurance provides temporary coverage, permanent life insurance offers lifelong protection, cash value accumulation, and other financial benefits that can align with your broader financial goals.
Key Differences Between Term and Permanent Insurance
Term life insurance is designed for temporary coverage, offering protection for a set period, typically 10, 20, or 30 years. It is generally more affordable but provides no payout or cash value if you outlive the term.
Permanent life insurance, on the other hand, lasts for your entire life as long as premiums are paid. It also accumulates a cash value over time, which can be borrowed against or used for other financial needs.
While term insurance works for many people, permanent policies can provide greater long-term security. So, when should you consider making the switch or adding permanent insurance to your insurance portfolio?
Fixed Premiums
Permanent insurance comes with fixed premiums, meaning you’ll pay the same amount throughout the life of the policy. Term life insurance, while affordable at first, tends to increase dramatically in cost as you age, especially when you try to renew after the term ends. This can make it less financially feasible in the long run.
Financial Planning and Wealth Building
Permanent insurance is not just about protection; it can be a key part of a wealth-building strategy. The cash value component of a permanent life policy grows over time and can be accessed while you’re still alive.
If you’re looking for a way to diversify your financial portfolio, switching to permanent insurance can provide a mix of security and investment potential. For families with significant estates, permanent life policies can also help reduce estate taxes, ensuring that more of your wealth is passed on to the next generation.
Health Concerns
If you’ve experienced health changes since buying term insurance, switching to permanent life insurance can lock in coverage for the rest of your life, even if you develop new health issues later on.
Many term policies are convertible to permanent policies without requiring additional health exams, which can be crucial if your health declines. Given that around 19% to 51% of Americans have a pre-existing condition, securing permanent coverage sooner rather than later is a wise move.
Additional Financial Flexibility
The cash value component of permanent insurance makes it more than just a death benefit. Over time, the policy builds up a cash reserve you can access through loans or withdrawals. This can offer financial flexibility in situations where you might need liquid funds, such as starting a business, dealing with medical expenses, or supplementing your retirement income.
Leaving a Legacy
For individuals looking to leave a financial legacy for loved ones, permanent insurance can play a key role. Since it offers guaranteed death benefits and doesn’t expire, it ensures that your beneficiaries will receive a payout when you pass away. This can be especially important for those who want to provide for future generations or cover significant expenses, such as estate taxes.
Permanent life insurance also offers options for charitable giving. If you’re looking to leave a portion of your wealth to a cause you care about, permanent insurance policies can be structured to benefit both your heirs and your charity of choice.
Partner with TIS for Your Insurance Needs
Switching from term or adding a permanent insurance policy is a significant decision, but it can be an important part of your financial strategy with the right guidance. If you seek long-term benefits such as guaranteed coverage, fixed premiums, and financial flexibility, transitioning to permanent insurance may be the right solution.
Contact a life insurance specialist at TIS Insurance Services to help evaluate your current insurance program and determine whether adding a permanent life insurance policy aligns with your financial goals.
