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The Alemian File: Term or Permanent Cash Value Life Insurance?

By David Alemian

Some people say term life insurance is better than permanent cash value life insurance, while others say permanent cash value life is better than Term life insurance.  Who’s right???

The correct answer is… it all depends on what you want it for.

Think of term life insurance and permanent cash value life insurance as tools designed to solve a particular problem.  Term insurance is temporary insurance.  It lasts for a period of time or term typically 10, 15, 20, 25, or 30 years.  At the end of the “term” it expires and you have nothing to show for all the money you paid over the years.

One of the biggest advantages of term insurance is its low cost when compared to the same amount of coverage with permanent insurance.  Its main purpose is to provide financial protection from a liability that is expected to eventually end.  For example: term insurance is often a good choice for young families who need a lot of protection, but can’t afford permanent insurance.  Rather than go without coverage or not enough coverage a term policy can provide families with the coverage they need.  The biggest downside of term life insurance is if the insured outlives the policy term, the insurance coverage ends. For example, a 40-year old purchases a 30-yr term policy, at age 70, the policy will end and the insured will be without coverage at a time when they are likely to need it.

Permanent cash value life insurance is just what it sounds like.  It can be designed to last your entire life and it also builds a cash value.  A suitable, properly structured, and permanent cash value life insurance policy will always pay out more money than is paid into the policy. This means that even though it appears to cost more money than term insurance, in the long run permanent cash value life insurance is a much better value.

For many people, the right answer is to have both a term policy and a permanent policy.  The term policy provides the extra protection that is needed during your working years. The permanent policy is there to provide protection in your retirement years.

To figure out which policy is right for you, use this life insurance calculator.  It will tell you how much life insurance you should have.  Then get a term insurance quote for the amount of coverage you need.  Buy a term policy that allows you to convert all or part of the policy to a permanent policy at a later date.

If you have questions, send an email to David@TheAlemianFile.com. Help keep yourself informed on financial issues… checkout and Like “The Alemian File” on Facebook.

About David Alemian

Successfully creating affordable retirement plans guaranteed to last a lifetime is a unique, specialty skill. It’s a challenging arena but respected writer David Alemian makes it look easy. Alemian is a leading retirement expert and nationally recognized authority whose expertise is shared via video columns, numerous journals, and talk-shows.

His national recognition results from both revolutionizing and revitalizing how organizations and individuals like you and me plan and save for retirement. Alemian is considered “The Go-To Guy” for creating and implementing absolutely irresistible, lifetime retirement pension programs.

Formerly the host of “It’s About Money” Radio Show, Alemian has also produced and is featured in over 200 financial education videos. Additional content can be found in many well-respected, publications including: MD Magazine, Physician’s Money Digest, Physicians Practice, Journal of Clinical Oncology, Consultant Live, Psychiatric Times, Cancer Network, OB/GYN.net, and The Healthcare Executives Network.

This article reflects the thoughts and opinions of the author and is being provided for educational and informational purposes only. It should not be considered financial or tax advice. Please consult your financial or tax advisor about your situation.

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