What is Permanent Life Insurance?

Life Insurance

If you are looking for a life insurance policy that will protect your family financially, even if your life to long, it may be time to think about Permanent Life Insurance.

What is Permanent Life Insurance?

Permanent Life insurance does just what its name says, it provides lifelong, permanent insurance coverage. It is a policy that protects the policyholder until death. It is a great insurance policy to cover long-term or lifelong needs such as care for a dependant or disabled child, funeral expenses, liquidity for business or tax liabilities of the estate.

How does permanent life insurance work?

If you pass away, your beneficiaries will receive a tax-free payment amount, just like other life insurance policies. As with most types of life insurance, permanent life policies have a savings component. The savings, or investment, part is in addition to the lifetime coverage. Some of the premiums are put towards investments and accumulate. They are tax-deferred, generating a cash value that the policyholder can use if required. If used as savings by the policyholder, the cash value can be used as retirement funds, being withdrawn partially or fully. This is done by using the cash value as collateral and taking out a loan.

Two Types of Permanent Life Insurance

Participating: Participating Life Insurance has guaranteed insurance payouts and cash values. Although you also get dividends each year, your premiums will stay the same.

Universal: Universal Life Insurance guarantees cash values on selected policies, and you can choose your own investment options. It is usually less expensive than a Participating policy and has more premium payment flexibility.

Advantages of Permanent Life Insurance

  • There is no set term for this type of insurance. You pay and get covered until you pass away or surrender the policy. Permanent Life Insurance has lifelong coverage, as long as the premiums are paid. Some permanent policies state an age, such as 100 0r 121. If you live up to those ages, you don’t have to worry about premiums. The death benefit will still be given when you pass away. Some insurance policies will pay out the benefit if the policyholder lives to a certain age.
  • Permanent insurance policies allow you growth on savings, as tax-deferred cash. If you end up having to surrender the policy, you will get that amount (or most) back.
  • Another advantage is cash value can be borrowed from this policy, like a loan. This advantage is in addition to the death benefit. Any loan, however, will reduce the death benefit and cash value by the amount you borrow.

If you have any questions, don’t hesitate to contact us to discuss Permanent Life Insurance further. Let us help you have peace of mind for your family.