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Should you get term life cover or permanent life cover?


When asked whether you have permanent life cover or term life cover, you may draw a blank. It’s difficult to understand financial terminology without a background in the financial sector.

So, what is the difference between these two kinds of life cover? And how do you decide which of these options are best suited for your needs? 

Term life cover

This is ideal for someone who’d like to protect their loved ones during financially risky times, but who aren’t interested in long-term life cover. 

For example, if you are the sole breadwinner, taking out term life cover until your mortgage is paid off will protect your family from bankruptcy if something were to happen to you. 

Similarly, if you’ve been commissioned to work a dangerous job, but only for the next decade, you could take out term life cover to protect you until your contract ends. 

You can usually get this cover for 10, 15, or 20 years, and it will protect you for the duration of your chosen period. However, this type of cover will not contribute towards a long-term investment. Once the term is reached, the cover falls away and you do not receive a pay-out. 

Permanent life cover

Unlike term life cover, permanent life cover is a life-long investment. 

This is because the insurer will invest your monthly premiums, which will build up a cash value over time. In some cases, you may even receive monthly dividends on this. After a predetermined number of years, you will also be able to borrow against the life cover. 

Permanent life cover is ideal for those who want to cover their family, and themselves in general, as well as diversify their investment portfolio. 

Universal life cover is a variation of permanent life cover. In addition to the benefits of the latter, the former also offers further investment options. 

In general, this will include the option of paying an additional amount along with your monthly premiums, which will be invested as well. This will propel your investment forward. 

There are benefits to each type of life cover, but it’s up to you to determine which option is “lit” – which, by the way, means “the best” for you.  

When consulting with your insurer, be sure to ask for quotes on all your different options so that you can make an informed decision. 

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