Nearly half of Americans do not have any form of life insurance. When you realize how vital a life insurance policy could be to your beneficiaries and loved ones still remaining, this seems low.
A life insurance policy can aid in paying off any remaining debt such as a mortgage payment, student loans and allow your loved ones to continue without the financial burden that may be associated with your passing.
An independent insurance agent can advise about permanent life insurance and any additional life insurance options. They’ll get offers from top life insurance providers and sort through multiple proposals to help find your best choice.
What Is Permanent Life Insurance?
Unlike term life insurance, which lasts for a predetermined number of years, permanent life insurance lasts as long as you do. In addition to a longer expiration date, permanent life insurance has different coverage options than term life insurance.
Permanent life insurance policies have a cash value accumulation feature that grows over time, similar to a savings account or money market account. In some cases, you can even borrow money against the amount you’ve accumulated.
Permanent life insurance can come in a variety of policy types, but the two most common are:
- Whole life insurance:
- Tax-deferred death benefits: your death benefit is the coverage amount selected and will be available upon your death to the beneficiary prechosen. These benefits are tax-deferred for a later time.
- Level premiums for the policy’s life: premiums remain stable and the same price throughout the life of the policy.
- Cash value accumulation: with a whole life policy you will have a cash value feature that depending on your policy type can be borrowed against. The cash value will accumulate over time and grow regardless of the company's investment performance.
- Universal life insurance:
- Tax-deferred death benefits: again, your death benefit is the coverage amount selected and will be available upon your death to the beneficiary prechosen. These benefits are tax-deferred for a later time.
- Flexibility to customize your coverage: universal life insurance offers flexible death benefits that can be adjusted within a coverage limit.
- Options for tailoring your premiums: this policy type offers flexible premiums that fit inside your budget.
- Cash value accumulation: you can earn higher interest when rates are high and a guaranteed minimum when they are lower.
What Does Permanent Life Insurance Cover?
Permanent life insurance provides a death benefit amount preselected by you and assigned to a beneficiary of your choosing. Coverage will become available upon your death. Unlike other insurance policies that provide coverage for situational claims, life insurance only provides coverage for your passing.
Why You Should Buy Permanent Life Insurance
First, if you obtain a permanent life insurance policy when you’re young and healthy, the premiums are significantly lower. With the added benefit of a permanent life policy lasting for the length of your lifespan, it is a coverage that should be bought sooner rather than later.
Second, with the cash value accumulation, you can watch the value grow. With this benefit, you can keep the cash value intact, borrow against it or surrender the value and cash it out entirely ending the policy.
The cash value is tax-deferred until you withdraw funds. If you take out a loan against the funds or borrow against it, then the value is non-taxable. This also applies when the death benefit is paid out.
The type of life insurance that’s right is different for everybody. Life insurance is all dependent on your needs as you get older. If you are requiring only basic coverage with an expiration date to pay for large expenses such as a mortgage or debts, then a term life insurance policy may be the best option.
Or if you’re young, want to take advantage of low premiums and have access to a cash value then a permanent life policy may suit your needs.
An independent insurance agent can help answer your questions and advise on which life product is best for your specific circumstances.
How Much Does Permanent Life Insurance Cost?
There are three major factors that go into the cost of your permanent life insurance policy:
- How much coverage you are needing
- How old you are when purchasing
- How healthy you are when purchasing
A permanent life insurance policy is less expensive when you are young and healthy. The lower premiums will go up the older you get. With a whole life permanent policy product, your premiums can be “locked in” and will remain the same for the entirety of the policy.
With a universal life policy, the premiums can be altered and is part of the flexible nature of a universal plan.
Comparing Permanent Life Insurance Quotes
An independent insurance agent will review your needs and help evaluate the permanent life insurance option that makes the most sense for you. They’ll also compare policies and quotes from multiple insurance carriers to make sure you have the right protection in place.
The Benefits Of an Independent Insurance Agent
Life insurance policies can be complex and searching through all the options can be confusing, time-consuming and frustrating. An independent insurance agent's role is to simplify the process.
They’ll make sure you get the right coverage that meets your unique needs. They’ll break down the insurance language so you can make an educated decision. Find out more by contacting an insurance agent in your area.