Wheeling , IL (PressExposure) November 30, 2009 -- AccuQuote, a leading life insurance provider in the United States, helps educate consumers on the differences between term life insurance and permanent life insurance policies.
"I feel strongly about educating people on the various types of life insurance options available," says Byron Udell, founder and CEO of AccuQuote. "Life insurance isn't a one size fits all product. If you choose the wrong product, you may end up putting your family's financial future at risk."
Term life insurance works like this: each year, a premium is paid to cover the risk of death during that year. The policy has no cash value, but if death occurs, the life insurance beneficiary collects the death benefit of the life insurance policy, generally income-tax free. Unlike term insurance, permanent life insurance policies are designed to have level premiums forever and most such policies issued today have a no-lapse feature designed to guarantee that the policy remains in force as long as specified premiums are paid. Permanent life insurance policies also provide a savings element that builds cash value.
In most cases, Udell recommends term life insurance. He suggests that people take the three C's into consideration when trying to identify which type of life insurance is best for them:
- Cost - When deciding what type of life insurance policy to buy, remember that the premiums for permanent life are usually much higher than term life insurance policies, but they remain constant during the lifetime of the insured.
- Coverage - When comparing life insurance, keep in mind the fact that you should opt for a policy that has a death benefit large enough to cover the needs of one's family. "If you choose a permanent policy and can't afford a death benefit equal to at least 10 times your annual salary, then you should opt for term," says Udell. "Remember, the goal of life insurance first and foremost is to replace your income if something should happen to you."
- Convertibility - When deciding what type of life insurance policy to buy, keep in mind that most term life insurance policies have a convertibility option. "The most important thing life insurance should do is to protect your family," says Udell. "If you can't afford a permanent policy today, opt for a term life insurance policy that allows you the option to convert into a permanent policy at a later date."