Life Insurance Query Colorado CO

Reader’s Question:

I am from Colorado. Our second child is on the way. My wife and I feel we need life insurance, just in case. Can you clarify differences between term and permanent life insurance?

Anthony

Denver, CO

Sure, Anthony.

It must be exciting around your house right now. Term life and permanent life have one major similarity. They serve to the benefit the beneficiary or beneficiaries. Term life and permanent insurance allow the owner to select the recipient of tax-free proceeds as a death benefit.

You see, there can be many types of permanent life insurance. These plans not only provide a death benefit but they often serve as investment products. There may be significant tax savings for these plans. Term life insurance has no investment features. The owner purchases a set amount of insurance for a renewable period of time. Usually the premiums are paid monthly.

Term life insurance is also available in an annual-renewable policy. With this insurance the owner can renew after one year but does not have to have a new medical examination. Many young candidates prefer this type of term insurance. Substantial value can be purchased at very reasonable rates. The automatically renewable aspect of this term policy is a terrific feature. Down the road, your term policy can generally be converted to permanent insurance.

Anthony, as your family grows in Colorado their dependency on you increases. This is a good time to be considering either a permanent or term life insurance policy. All the best of luck with your new arrival!