What's The Difference Between Term Life And Permanent Life Insurance

What's the difference between term life and permanent life insurance? We're going to talk about that in detail today, and I brought with me my partner, Jason, who is an insurance professional and expert for, I don't know, probably decades. You want to have a conversation with him. At the end of the video, we'll give you a link to get into that conversation, have a one-on-one to see what's right for you. I know what you're being pitched out there is a bunch of junk, but I'm going to let Jason talk about that in our interview. So we're going to talk about three things specifically. Understanding the basics of term life insurance, which we call death insurance. Number two, understanding the difference and the distinction of permanent life insurance. Number three, talking about you. How do you decide which to do and which not to do? So we're going to have that conversation. Get a pen and paper. Hey there, welcome back. And I'm here with Jason as promised on an interview about the difference between term and permanent. So Jason, talk about term insurance, give the distinctions. I know we have a huge about it, but share in detail. Yeah, I'd be happy to do that. Term insurance is kind of what the term says. It's for a certain period of time. I often like to call it terminate insurance. That means it's going to terminate after a certain period of time. Typically, it can be anywhere between 10 to 30 years. So in that timeframe, you're going to be paying premiums. And then at the end of that, you walk away with nothing unless you die during that timeframe. So term insurance really only has one benefit and that's when someone dies. And so that's why we call it death insurance. It's someone's got to die in order for something to be worth to you. Now, of course, there's the mental, okay, everything's this or whatever. Yet there's no other benefit. There's no cash value or anything like that. Term insurance often is a bandaid. It's something that might be a very short need that's going away. However, even if you make a billion dollars today, you don't have enough to buy your tomorrow. And you don't know what you're going to be like tomorrow health wise. So in the event, you're going to do term, make sure it's convertible. And what I mean by that, that it's can be convertible down the road into a permanent policy, which is truly life insurance. Perfect. And then let's talk about permanent life insurance and the distinctions. So permanent life insurance is exactly what it is. It's going to be around the whole time. And often it's referred to whole life insurance. Now there's a lot of misnomers out there and there's a lot of misdirection, head fakes in the industry. There's truly only one kind of whole life insurance or one kind of permanent insurance. Others such as ULs, they sometimes would call that permanence or guaranteed whole life, universal life or something like that. It's really not the case. You need to get into the details. And sometimes those details can be daunting. That's why you want a professional like myself to be able to talk you through the jargon that's in the contracts, right? You want to make sure that you're getting what you think you're getting. Sometimes people think that all permanent is a lot more expensive. However, let's do this thought experiment for a minute. Let's say we have a 20 year term policy and it's $1,000 a year. At the end of 20 years, you have paid out $20,000 and you have nothing. There's no more opportunity to have a death benefit or anything. The flip side, let's say the whole life is five times as much and you're going to do $5,000 a year for 20 years. Well, that's $100,000. In the event that it's designed by a professional like myself, your cash value or your equity in that contract will be beyond $100,000. It could be $120,000, it could be $150,000. At the end of that 20 year period, you can say, you know what? I don't want this policy anymore. They would send you $120,000 or more. When you look at it that way, is it really more expensive or looking from a cost point of view? Because what really cost the term, it was $20,000. If you look at it the other way, you can almost say like, well, there's no cost there. You got to be really careful in what you're doing and making sure that you have the right type of insurance. And Jason, talk a little bit in that context when they say, and we say, be your bank inside of that. Describe a scenario or two, like maybe the real estate example that you use on how you can use your permanent insurance to borrow against to become a bank. Right. So what you have the opportunity to do is that equity or the savings component of a permanent policy, a whole life policy, particularly from a mutual company, which you want to have, that can become a line of credit similar to, but not exactly like a HELOC that you would have in your home, which you're basically borrowing against your equity in your home. We can do that as well with the life insurance policy. The life insurance policy continues to appreciate your cash value, continues to grow at its full amount, even though you have a loan against that. This opens a window to you to minimize opportunity costs on most anything you purchase. And yes, I'm talking about anything from a piece of gum to a second house or whatever it is purchased. Now, you may not want to deal with the smaller amounts. It's too much of a headache. Yet when it's larger properties or larger investments or whatever it is, you want to take into consideration how you are financing that purchase. Generally, whoever finances a purchase in your life makes a lot of money, whether that's the dealership for your car, a mortgage company or something. Whoever's financing that purchase is going to make money from you for the fact that you're going to pay them back principal and interest. When you have the right kind of contract, you can put, insert yourself, that your future self is going to finance that purchase. And your future self makes the same amount of money that the mortgage company would make or dealership. Now, great examples. And before we go on to our last point, I want you to subscribe to our channel. Click the notification button. Be here five days a week. It's family friendly. Anyone I believe five years and up can listen. You say five years old, this is sophisticated topics. And you know what? Most of them have no filters, no inherited bad behaviors. You're going to be shocked what your kids come out hearing versus what you hear because of your filter. And so make sure you're here. If you have any questions about anything, you and your family can go to asklaural.com, A-S-K-L-O-R-A-L, ask questions, make a request. And we'll be right here every day and at Ask Laural, we're there 24 seven. So Jason, let's go to the last topic, which is really deciding. I mean, what do you do and what don't you do? You should get life insurance, period, as much as you can possibly get. When you understand really what's happening inside the contract and your ownership of a mutual insurance company, you're putting yourself and your future generations in line to have a lot of wealth. I mean, you're buying future dollars with pennies or dimes. Who doesn't want that? Who doesn't want the maximum amount there? And the cool thing I like about the insurance industry, they're blind, if you will. It doesn't matter what gender you are, what religion you are, what skin color you are, whatever it is, the amount of insurance that you can get to, the maximum amount you can get to is based upon your age and your income, period, nothing else. And so when you're thinking about what type of insurance to get in the event that say that's right now, it might not be possible for you to get a total permanent coverage, such as whole life for your human life value, then maybe you get some term insurance temporarily, right? And then convert that over time into permanent or whole life insurance as your income grows and as your ability to finance that savings that you're doing. So again, if you want to have a conversation with Jason, with one of our professionals on our team at Insurity, then you're going to go to the link below, click on the scheduling link. It will take you right in to actually have an appointment. Tell Jason and the team, you saw us out here on our YouTube channel and we look forward to helping you and serving you. One last question, Jason, I just want to ask is why is only, it seems, term insurance being marketed all over in every ad? Just because it's cheap and easy? That's my answer to it. It's cheap and easy. And people just feel like they can check the box and have it, but they really didn't do any evaluation other than cheap and easy. Think about it from the other point of view, from the business point of view. I mean, McDonald's advertises the Big Mac, right? It's the best product. It's possibly the one that sells the most. Term insurance is the most profitable product for the insurance industry, for the fact that 99 plus percent of all term policies do not renew or do not pay out during that timeframe. So they collect those, it's like the renting, right? They're collecting the rent on the death benefit, then people go away and there's no more liability to them. By far the most profitable. That's why they push it a lot. Great answers, great insights. So again, if you have any questions, go to asklaural.com, A-S-K-L-A-U-R-A-L. Ask questions, make a request, make sure you schedule some time with Jason in the very near future. I would encourage you, we're recording this at the end of 2023 and airing it then, so make sure you get on his calendar before we turn to 2024. Talk soon.