Is Permanent Life Insurance Good?

There are two main types of life insurance that people are mostly familiar with- whole life and term life. Whole life is also known as permanent insurance and term life is also known as temporary insurance. There is an ongoing debate about which type is better so you'll need to compare the two to determine which one is right for your situation.
Permanent Insurance- Whole Life With this type of insurance, you will have coverage for as long as you live. It is also more expensive, sometimes double the premium of term life. The reason for that is because part of your premium goes into a separate account each month, where it is invested by the insurance company. Some people refer to this as "forced savings." This extra premium builds up cash value in your policy, which you can withdraw in the future.
One of the advantages of whole life is that you have a fixed premium for the rest of your life. No matter how old you get or what happens to your health, you will be insured and you don't have to worry about qualifying for life insurance again or having your premium increase. One of the disadvantages is the price- many people simply cannot afford the premiums and what they can afford, may not be enough coverage for their needs.
Temporary Insurance- Term Life Term life insurance covers you for a certain period of time, or a term. This term can be anywhere from 1 year to up to 35 years. The premiums during the specified term are level. After the term is up, you will have the option to renew at the higher rate based on your age, or you can let the policy end. Most term policies give you the ability to renew until the age of 95, and many are convertible to whole life until age 70. One of the major advantages of term life insurance is that it is very affordable. Most people can afford the premiums, and are able to get the amount of insurance that they need.
Return of Premium Term Life Some people prefer whole life because of the ability to build cash value. What they don't realize is that some term life policies have a feature where you can get all of your premiums returned to you at the end of the term. If you decide to add this feature to your term life policy, and you outlive the policy, then the insurance company will send you a check for the amount of premiums that you paid into your policy.
For example, let's say you have a $500,000 20 year term life policy with return of premium and your payments are $100 per month. After 20 years, you will have paid $24,000 into your policy. If you are still living at the end of your policy, then the insurance company will send you a check for $24,000, and it is tax free. Many people will use this money to buy a fully paid up policy, but you can do whatever you want with it.
Which One Is Right For You? It is best to speak with a licensed agent to help determine which type of life insurance is right for you, and to find out exactly how much insurance you need.