Term and Permanent Insurance for Critical Illness and Life Insurance

Term Insurance

Term insurance is the most cost-effective type of insurance and should be used to protect against risks that have a foreseeable end date. After a certain age, term policies will expire and their protection will end. If the policy was never claimed, the premiums would have been spent to offset the insured risk.

Examples of short term risks include; insuring a mortgage or making sure your children are protected until they are of age. Both these risks will end at some point (ie. when you pay off the balance of your mortgage or your children are old enough to support themselves) and the protection will no longer be needed.

Term policies have a set price for a period of time (ie. 10, 20 or 30 years). After this first interval, the policy will automatically renew for a second interval at a higher price. You will not have to submit any paperwork or answer any medical questions when it renews. Renewals will continue until the policy expires when you reach a predetermined age.

Permanent Insurance

Permanent insurance refers to products that stay in place until you claim them or you pass away. They have higher premiums than term insurance because they do not expire.

These policies generally need to be paid over a set period of time after which they are considered paid up and premiums are no longer owing. There are many features which can be added onto permanent policies which are not available for term products and, in some instances, there is the potential for growth within the policy.