What Permanent Insurance Can Do For You
Permanent life insurance provides coverage for the entirety of the insured's life, as long as premiums are paid. Unlike term life insurance, which only provides coverage for a specific period (such as 10, 20, or 30 years), permanent life insurance policies offer lifelong protection. There are several types of permanent life insurance, with the two most common being whole life insurance and universal life insurance:
Whole Life Insurance
This type of policy provides coverage for the insured’s entire life, and premiums remain level throughout the life of the policy. A portion of each premium payment goes towards the death benefit (the amount paid out to beneficiaries upon the insured’s death), while another portion goes towards the cash value component. The cash value grows over time on a tax-deferred basis and can be accessed by the policyholder through policy loans or withdrawals.
Universal Life Insurance
Universal life insurance offers more flexibility compared to whole life insurance. Policyholders can adjust their premium payments and death benefits over time, within certain limits. Like whole life insurance, universal life policies also have a cash value component that earns interest over time. However, the interest rates are typically tied to market performance and can vary.
Benefits Of Permanent Insurance
Permanent life insurance policies generally have higher premiums compared to term life insurance, but they offer the advantage of lifelong coverage and the potential to build cash value over time. Additionally, permanent life insurance can be used for estate planning purposes, as the death benefit can help cover estate taxes or provide an inheritance for beneficiaries.
