What is permanent life insurance?
Permanent life insurance is a life insurance policy that remains in effect for a persons entire life, so long as monthly premiums and any other contractual obligations between the life insurance company and the policy holder are met.
Permanent Life insurance policies by their nature are more expensive and more complex than Term Life insurance policies. There are various types of Permanent Life insurance such as Whole Life, Universal Life, and Variable Life. What these life insurance polices all have in common is they build cash values in tax-deferred savings from which future premiums can often be paid, or against which policy loans can be made. With any type of Permanent Life insurance policy a portion of your monthly premium is placed into some type of annuity or investment account. The difference between the various types of Permanent Life insurance are based on the type of funds that this portion is placed into, and who makes those investment decisions. Whole Life insurance usually has a single fixed interest rate for the life of the policy. The cash value and even the death benefit can fluctuate with a universal or variable life policy, but some policies set a minimum death benefit. However these types of life insurance policies offer greater flexibility than Whole Life as you can reduce or increase the amount of the death benefit and vary the amount of your monthly premiums.