Permanent Life Insurance
Permanent Life Insurance policies provide lifelong protection, so long as premiums are paid on time. Because these policies are designed to last a lifetime and can accumulate cash value, monthly premiums are typically higher than Term Life Insurance.
The most common types of Permanent Life insurance are:
Whole Life Insurance is a common type of permanent life insurance. These policies never expire, as long as you pay you premiums on time and in full. In addition to a death benefit, Whole Life Insurance policies also include a cash value component that can build over time. Premiums remain level for the life of the policy.
Universal and Variable Life Insurance policies can give you a greater degree of flexibility. With both types of insurance, you can adjust your premium and your death benefit. With Variable Life Insurance, you are also empowered with different investment options.
Over the life of a Permanent Life Insurance policy, you can borrow money against the accrued value. If the loan has not been paid back at the time of death, the amount of the loan will be deducted from the death benefit amount. On some policies, the cash value increases to the point where monthly premiums become unnecessary, and the policy effectively pays for itself.
Permanent Life Insurance is considered best for individuals who believe that their family will need to rely on the policy's death benefit, no matter what age they are when they pass away.
For example, parents who have disabled children who will likely never be able to support themselves might want to consider Permanent Life Insurance over Term Life Insurance. And for people who expect to leave behind a considerable estate for their heirs, this type of policy can be used to help pay off estate taxes, if applicable.