There are three types of life insurance
• Term insurance
• Universal life
• Whole life
Term insurance is sometimes referred to insurance that you “rent” for a set number of years.
It is temporary coverage for a temporary need.
What are some temporary needs?
• A mortgage
• Providing for minor children
• Paying for college or weddings
Universal life and whole life insurance are coverage for needs that are permanent in nature or one’s that are not likely to occur for at least 30 years. If we continue the analogy above this is coverage that you “own”.
As you would expect the price to rent is less than the price to own however in some cases the cost to own is less than the cost to rent. That is because Universal and Whole Life insurance can have a cash value that when taken into account could reduce the net cost of ownership.