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Permanent Life Insurance

Permanent life insurance is a type of life insurance that serves a dual purpose. It provides your family with a death benefit when you die and also provides you with a type of savings account while you’re living. Unlike term life insurance that expires after so many years, permanent life insurance is just as the name implies. It provides you with insurance coverage all of your life or “permanently”.

In addition to providing a death benefit if needed, permanent life insurance also allow you to invest some of the premiums into an investment portfolio, which usually generates an even higher return than if left in the policy. What most people like most about permanent life insurance is that they don’t have to worry about renewing the policy because it’s always there providing protection for the individual and their family members.

Different Types of Permanent Life Insurance

Once you’ve decided to go with permanent life insurance, you’ll be asked what type you want and will be able to choose from the following options.

  • Whole life – The most basic type, whole life insurance offers both a death benefit and a savings option. The premiums always stay the same. This is generally the most expensive.
  • Universal life insurance – This type is a combination of both whole life and term insurance. It includes a cash value and can give you returns at a fixed rate of interest. It’s less expensive than whole life, and the premiums and death benefits can be adjusted to meet your current needs.
  • Variable life insurance – This type of life insurance provides protection for your entire life while also offering investment options.
  • Variable-Universal life insurance – This type of insurance offers features from both the universal life and the variable life insurance. It offers various investment options.

Advantages of Permanent Life Insurance

Here are a few of the advantages of permanent life insurance.

  • It never expires. This is by far its best feature. The policyholder will not have to worry about renewing it every year or so. It not only continues to remain in force but also increases in value through the years.
  • Premiums stay the same. Some types of life insurance start off with a low premium and then increase to a much higher and unaffordable rate. This does not happen with permanent life insurance because the premium that’s set at the beginning of the policy is the same at the end of the policy.
  • Cash value increases each year. The accumulated cash value in a permanent life insurance policy can be used for a number of things, including college, home repairs, etc. The policyholder can pay the money back when they’re financially able.
  • Cash value is tax-free money. Because the dividends and interest is nontaxable money, the cash value is also tax-deferred. Therefore, if the policyholder does borrow money from the policy, this money is tax-free.

Disadvantages of Permanent Life Insurance

Like everything in life, where there are advantages, there are also disadvantages and this holds true with permanent life insurance, too. Here are some downfalls of permanent life insurance.

  • It’s more expensive. While permanent provides much better protection than term insurance, it also comes with a much higher price tag. Because of this, permanent life insurance is not the best option for everyone. As unfortunate as this is, many people purchase permanent insurance with long-term goals in mind, but end up having to cancel the policy because they can’t afford it.
  • More requirements must be met. Unlike some life insurance policies that can be obtained without even a physical, permanent life insurance requires not only a physical examination but also a lot of documentation such as medical histories of the policyholder and their family members. Many feel that far too much personal information is required for permanent life insurance.
  • Must pay cash back. Although it’s stated that you don’t have to pay any money back that you’ve withdrawn from the policy, you actually do if you want your family to get the full death benefit.

Who Should Use Permanent Life Insurance

Although permanent life insurance has some many attractive features, it’s not for everyone. The best candidates for this type of insurance are those that have long-term goals and know what they are in terms of retirement or later-in-life choices. It’s also ideal for those that have the knowledge necessary to make wise investment choices. For a free permanent life insurance quote, fill out our simple online form now and compare rates from top providers.

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