Permanent life insurance

Permanent Life Insurance

When you hear the term “permanent life insurance,” it refers to types of life insurance plans that don’t ever expire, which is in direct contrast to term life insurance plans, which do expire if the insured doesn’t expire within a set amount of years.
Permanent life insurance plans will add up, over time, so that the policies build in value (as more cash is added). This is on top of a death benefit that will already be paid out to the beneficiary, in the event of death. Because of the built in cash value of permanent life insurance, individuals can also borrow from the insurance fund to cover specific expenses that accrue in life, such as medical expenses and education costs.

Permanent Life Insurance Types

Permanent life insurance is a category of different plans, all of which have different qualities, benefits, costs, and features. Here are some different types of permanent life insurance plans:

  • Whole: Whole life insurance plans are made to build in value slowly, and have fixed premiums. Any amount you borrow on a whole life insurance policy that isn’t repaid in life will be taken out of the death benefit, in the event of death. The fixed premiums are set at the outset of the plan, and typically last only a certain number of years (10, 20, 30, and so on), or are set to end at a specific age.
  • Variable: Variable life insurance is designed to grow the cash value of a policy by placing the cash value of the plan into an investment account that is solely managed by the insurance company. The earnings of this investment account, in the case of death, can either be put towards the remaining premiums, or will accumulate on top of the death benefit. However, losses of the investment account may reduce the value of the death benefit.
  • Universal: Universal life insurance is incredibly flexible, in terms of payment. Essentially, you only have a minimum amount of premiums that you need to meet, annually, but can skip payments if you are unable to pay them that month. However, the cash value of the policy won’t grow unless you are using the premiums to put into it, and failing to meet the minimum premium payments may reduce or void the death benefit. These types of plans can be mixed with variable plans, but become increasingly more complicated.
  • Survivorship: A survivorship life insurance plan covers two different individuals, usually spouses, so that either one is covered, in the event that one of them dies. Because it is a joint deal, it is usually more affordable than two separate life insurance policies.

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