Term or Permanent?

Term life policies are very different from permanent life policies. We'll explain how term life differs from its counterpart here.

1. No cash value accumulation. One thing to consider as you get online term life insurance rates is that term policies do not build cash value over time. That means that when your term expires, the policy will have no further value. Permanent life policies accumulate cash value over time, and this value is added to the predetermined death benefit when the policy is distributed to your beneficiaries.
2. Tax treatment. With both term and permanent life, death benefits are usually received tax-free. However, the two policies have one main difference with regard to their tax status. With permanent life policies, the cash value that the policy accrues does so on a tax-deferred basis. Term policies have no such benefit. Remember this drawback as you look into online term life insurance rates.
3. Cheaper initial premiums. You will find that online term life insurance rates are much lower than those of permanent life policies. Term life has very low premiums initially, making it a great way to purchase a lot of coverage without spending a lot of money. Some financial experts advise that everyone buy a term life policy and then invest the money they save on premiums. In this way, you can still reap the investment benefits that would come with a permanent policy without spending the extra money.
4. Increasing premiums. As you look at online term life insurance rates, keep in mind that term life premiums will increase as you get older. When you have to renew your policy, your advanced age could make it costly or completely unaffordable to purchase life insurance. Permanent life insurance, on the other hand, has higher premiums initially, but these rates stay the same regardless of your age. In the long run, then, permanent life may actually cost you less money, depending on your circumstances.
5. Borrowing against the policy. Term life policies do not give you the option of borrowing against the cash value of the policy because they have none. Permanent life policies allow the insured to borrow against or withdraw from the cash value of the policy.