life insurance premiums remain the same while term insurance rates typically rise with age. For instance, a 21-year-old purchasing term insurance might pay $20 per month for a predetermined amount of coverage.
The 21-year-old could pay $100 per month for the same amount of coverage with a universal policy, with $20 going toward death benefits and the remaining $80 going toward savings.
When a person reaches the age of 45, term insurance might cost $50 per month, whereas universal life insurance would still cost $100 per month. However, less of that amount would go into the cash savings component, and more of it would be used to make up for increased risk.
Special Considerations For the average person looking to protect themselves and their loved ones from unforeseen circumstances, term life insurance is the best option. That is especially true for young families that are on a tight budget, in part because they can purchase a much larger term policy for the same amount of money.
The fact that term insurance comes to an end eventually may meet the needs of some people. For instance, parents of grown children who are financially stable may no longer require life insurance.
However, not everyone should go with a term life insurance policy. For instance, individuals who would benefit from permanent insurance’s tax advantages may be less concerned about the plans’ higher costs.
