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Life on Your Terms
June 24, 2016
Should you buy term or permanent life insurance? Here's what to consider.
There are two main types of life insurance: term and permanent. You want the degree of comfort that comes with knowing you and your loved ones are protected. But how do you decide which type to purchase?
4 questions to ask that can help guide your decision
- How much can I pay? And how much coverage might I need so my beneficiaries have no financial worries?
- Will I need coverage for a certain length of time or for the rest of my life?
- Might I need access to a source of cash for emergencies, college funding, retirement or other opportunities?
- Do I need flexibility in coverage or premiums?
Answering those questions is a good start in determining which option may be best for you. But you may still be wondering "What is a term life insurance policy?" or "How does whole life work?" So let's take a closer look at your policy options.
Term life insurance typically offers low premiums and benefits to help beneficiaries cover expenses if you die during the contract term. It could be the easiest form of financial assurance you can buy.
Permanent life insurance may be used to cover expenses in the short term or used as a supplemental source of income in retirement. This can be very useful depending on your family's needs. Keep in mind that loans and withdrawals from the policy will decrease the death proceeds.1 Another point to note: There are several types of permanent life insurance, such as whole life, which provides a guaranteed death benefit, premium amount and cash value growth.
Universal life insurance has similar features to whole life. It also allows you to make a specified number of changes during the course of the contract, which can be useful.
These tips should give you a good idea about what you need to consider. In addition, your need for life insurance may change as time goes on. Sometimes a mix of both term and permanent may be appropriate, depending on your personal situation and what you require from your coverage.
The most important function of life insurance is to protect yourself and your family, and both types can do that. And it pays to re-evaluate your coverage at regular intervals.
Of course, the best type of life insurance is the kind that's in force when you need it. Talk to a Thrivent Financial representative to help you determine whether term or permanent – or a blend of the two – should be part of your family's financial strategy.
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A Thrivent Financial representative may contact you. This contract has exclusions, limitations, reductions of benefits and terms under which the contract may be continued in force or discontinued. For costs and complete details of coverage, contact your Thrivent Financial representative.
THRIVENT FINANCIAL IS THE MARKETING NAME FOR THRIVENT FINANCIAL FOR LUTHERANS.
1Loans and surrenders will decrease the death proceeds and the value available to pay insurance costs, which may cause the contract to terminate without value. Surrenders may generate an income tax liability and charges may apply. A significant taxable event can occur if a contract terminates with outstanding debt. Contact your tax advisor for further details. Loaned values may accumulate at a lower rate than unloaned values.