Ways to manage debt
When we had discussed the ways to consolidate debt in “Manage Your Debts Through Debt Consolidation” we had mentioned the possibility to draw payday loans from your whole life insurance policy to consolidate your current debts. The benefits of this, if you remember, would allow you to not only consolidate your current debts and make the paying back of your life insurance optional, although important to your beneficiaries.
In this article I thought we would talk about the differences in life insurance policies in relation to how they can be used as money saving vehicles for you and your loved ones.
There are two types of life insurances, each with their own variations. These two types are Term Life Insurance and Permanent Life Insurance. We will discuss the differences between the two below.
Term Life Insurance
The most prevalent life insurance available today and purchased by most people is Term Life Insurance. With Term Life Insurance you are basically renting insurance for a specified term or amount of time. Once this time elapses you have to renew your insurance by applying for another term.
Here your coverage is for a set period of time of maybe 5 years, 10 years or longer but during this time their are no savings benefits. The only benefit that you will harvest from term life insurance is in the event that you die you will be covered by it. If this happens, your beneficiary will get a cash settlement as agreed by your policy holder, and probably won’t need payday loans to deal with your mortal remains.
Permanent Life Insurance
The most preferred life insurance is Permanent Life Insurance. This type of insurance covers you for life as long as you continue to make your premium payments. The nice thing about permanent life insurance is that there is an investment value associated with it. You can use this form of insurance to build cash value in addition to a death benefit for your chosen beneficiary.
If you’ve got to have life insurance, and I would highly recommend that you do, it is much smarter to go with a permanent life insurance policy.
Knowing the valuable difference
The differences between the two can be understood better by relating Term and Permanent Life Insurance to buying or renting a home. When renting a home or apartment the only benefit that you get is the opportunity to live in the premises as long as you continue making the payments on time. Many choose to rent because the cost of doing so is cheaper. When buying a home however, your mortgage payment may be larger each month then renting, but you have the additional benefits of building equity in the home that provides you a real cash value and return later.
Permanent and term life insurance, although much the same, are different in these same ways. Permanent life insurance may be more expensive but will serve you better over time whereas Term Life Insurance like renting, will only serve you during the time you are paying for the benefit, like payday loans help you during a temporary period of crisis.
Choose the vehicle which is going to save you more
As the saying goes “YOU GET WHAT YOU PAY FOR”, choosing the least expensive route will not necessarily serve you better in the long run. Always take a close look at your options and consider your future when you do so.
I’ve never really thought about life insurance in the same way as renting or buying a home, and when said, it does sound better to go with something that proves equitable over time. No one knows when your time is up so why put a cap on it?!
Life insurance is an essential, especially if you have children. You don’t want to leave them with your debt, and since you don’t know just exactly when the end is, you really have to hedge your bets, and permanent coverage is the way to go. I mean, unless somebody wanted to leave their children with debt.