Life insurance is a vital aspect of every individual’s life, helping to benefit your beneficiaries and loved ones once you pass on. However, it can also be beneficial throughout your life when utilized as a financial tool. Still, a great majority of Americans do not invest in life insurance. This guide will help you understand just what permanent life insurance is and the different types of policies. If you are interested in a permanent life insurance policy, it is important to speak with a professional life insurance agent, as they can help to walk you through which policy option will be best for your needs.
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What is Permanent Life Insurance?
Permanent life insurance is sometimes confused with term life insurance. However, the two are very different. Term life insurance is exactly how it sounds and only lasts for specific terms or years. However, permanent life insurance is also exactly how it sounds and is a permanent plan that lasts for the entirety of your life. Term life insurance is also more limited than permanent life insurance, as permanent life insurance policies offer more options.
A perk and prime feature of permanent life insurance is a cash value accumulation aspect of the policy. This means that a cash value amount will grow over time. Many individuals take advantage of this aspect and use it as a savings account. Some individuals can use that cash value accumulation as a financial tool for borrowing.
Policy Types
There are several different kinds of permanent life insurance policy types. Each type has different benefits and drawbacks, which may be ideal depending on your need. Two common policy types are outlined below.
Whole Life Insurance
Whole life insurance policies are very stable plans, as you will select a death benefit upon choosing the plan and a fixed premium. This death benefit will not waver, along with your premium, through the duration of the policy. After your death, the beneficiary amount will become available. There is also a cash value accumulation aspect to whole life insurance policies, which allows the value to accrue over time.
Universal Life Insurance
Universal life insurance offers more flexible options when it comes to death benefits, as well as flexible premiums. When you pass away, your death benefit will become available to your beneficiary. If you want to customize your coverage when it comes to death benefits, that option may be available to you depending on your coverage limit. There is also a cash value accumulation aspect to universal life insurance policies.
What Does Permanent Life Insurance Cover?
Permanent life insurance produces the most benefit for an individual at the time of their passing. That is because the death benefit amount will then become available to the beneficiary that you have selected. Permanent life insurance does not cover situational instances and instead covers a person’s life. This can become confusing for some individuals, but this does have its benefits.
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Benefits of Permanent Life Insurance
Although you may not be thinking of passing away when you are young, and in good health, that may be the perfect time to purchase a life insurance policy. Why? When you are young, and in good health, the insurance company will recognize that and lower the premium. This premium will remain stable and will be permanent throughout the duration of the policy. This means that younger and healthier people typically have an advantage when purchasing a permanent life insurance policy.
The cash value accumulation aspect of the policy offers policy-holders a financial tool. This aspect of the permanent life insurance policy allows policy-holders to watch the cash value growth, and they can then use it as a borrowing tool. However, if an individual chooses to cancel their plan, they can typically cash out that value amount. This value is tax-deferred until withdrawal.
How Much Does Permanent Life Insurance Cost?
The cost of permanent life insurance depends on a variety of different factors. Speaking with a professional insurance agent can help you determine how much you could pay for a permanent life insurance policy. How much overall coverage you need can affect how much you pay for a policy. Your age when you purchase your policy will also affect the price, as well as your health.
Permanent life insurance policies are less expensive for people who are young and in good health. These premiums will continue to go up, depending on your age. This means that the longer you wait to get a life insurance policy, the higher the premium will be. However, this premium will then be permanent and will not change through your policy’s course with a whole life policy. A universal life policy may mean an alteration of premiums.
Speak with an Independent Insurance Agent
Deciphering life insurance policy terms is not a walk in the park. Searching for different policies can take up a lot of your time and quickly become overwhelming. Take the guesswork out of insurance policy selection. Speaking with a professional and experienced independent insurance agent can help you decode insurance lingo, guiding you towards a policy that will best meet you and your needs. Their job is to simplify the process and help you make the best decision when selecting a permanent life insurance policy.