Benefits of Permanent Life Insurance

Permanent life insurance once purchased, offers life term coverage for the policyholder. Apart from death benefits, the investor also stands to receive cash reserves, which accumulates over the length of the policy.  The cash value accrues in interest, through investment options made either by the insurance company or by the owner of the policy himself.  Policyholders can also withdraw sums of money from this cash fund, if they have to cover other expenses. Investors get a wide range of choices to choose from when it comes to permanent life insurance. They can go in for single premiums where they pay lump sums upfront to buy the insurance or take up a traditional policy that requires regular payments on a monthly, quarterly, half yearly or yearly basis. The type of policy is also not taxed which makes it easier to plan estates for the policyholders.

Types of permanent life insurance:

Whole life insurance

In this type of insurance, the investor receives coverage for life. The rate of premiums remains constant for the entire length of the policy.  While the premiums are more expensive than traditional term life products, a permanent life insurance policy like whole life, offers a lot of benefits along with it. The policy accumulates in cash value over the life of the insurance, which will leave the investor with a sizeable sum of money in the long run. Death benefits offered through this type of insurance will also be a substantial amount and can prove highly beneficial to your benefactors. Policyholders can also borrow a portion of the cash value to fund for other expenses.

Universal Life Insurance 

This type of insurance is a little different from whole life policies. Here the three components of permanent life insurance are separated – death benefits, administrative fees and investment options. Universal life insurance offers the policyholder with more investment options than traditional whole life products. This type of policy also offers considerable levels of flexibility when it comes to making premium payments. The premiums and coverage amount with universal life insurance can be changed on a year-to-year basis if desired by the investor.

Variable Life Insurance

In this type of policy, the policyholder enjoys a greater degree of flexibility when it comes to investment options. Cash reserves from the policy can be invested in stocks, securities and bonds. With all this, comes an enhanced possibility of risks, as the investments are tied to the market performance. If the policyholder has made sound investments, then the cash value of his or her policy would register higher returns than traditional whole or universal life policies. On the other hand if the choices of investment are weak or if the market is going through a financial downturn, the investor stands to lose a considerable portion of the cash reserves. This means that the death benefits and the cash value of your policy are not guaranteed.

This is in many ways a combination of universal life and whole life insurance. It offers premium payments with the coverage flexibility benefits that you can generally get from universal life policies. There are also investment opportunities that are offered in this policy which are a little similar to what we find in variable life insurance.

Single Premium Life Insurance

People, who go in for this type of permanent insurance, usually pay upfront, the premiums due for the entire policy. This would require the investor to pay a substantial sum of money to purchase the life insurance. The money could be $10,000 or much more depending upon the profile of the applicant.