Why You May Need Permanent Insurance instead of Term

Term insurance is temporary insurance, meaning it is designed to expire, presumably after you no longer have a need for coverage. Yearly renewable term doesn’t necessarily expire, but if your need for insurance continues, the premiums will increase until they become very expensive. While term insurance can be very inexpensive initially, if your need for insurance doesn’t go away, it could cost you much more later to keep the coverage. With some permanent policies and their ability to accumulate tax favored funds, the total cost of ownership over 25 to 40 years can be much less than a term policy. Here are three reasons why you might need to consider permanent life insurance coverage:

Your family has a history of medical illnesses, diseases, or conditions. If there is even a remote possibility that you could inherit a medical condition, you need to look ahead to the possibility that you may become uninsurable at some point. So, when your term policy expires, and you still have a need for life insurance, you may not be able to get it, or it may be prohibitively expensive. Permanent insurance protects your insurability.

Your spouse is unable to work. This could be due to medical reasons, or maybe, he or she had to leave the workforce for a period of time, and they aren’t qualified for employment that could generate sufficient income to meet the family’s needs. In many cases, the spouse’s need for income never goes away, and, if sufficient assets have not been accumulated, they will suffer a hardship.

You build a successful business. Businesses are built to last a lifetime or longer, and for the family it becomes the lifeline. Also, if you have partners, they also need protection if they want to be able to continue the business without you. Generally, term-type coverage can’t economically address the needs of business owners.