Permanent Life Insurance

Buying permanent life insurance is one of the best decisions you can make for your family if you suddenly pass away. Regardless of the policy, life insurance can help your beneficiaries pay for your funeral and burial costs. They may even receive a lump sum in the event of your death.

However, not all life insurance policies are the same. Permanent life insurance is a popular choice among people who don’t want their coverage to expire. However, there are some caveats to be aware of if you plan on applying. Can you have multiple life insurance policies to ensure comprehensive coverage and financial protection for your loved ones?

Below, we’ll explain everything there is to know about permanent life insurance so you can make an informed decision. 

Permanent Life Insurance Explained

What is permanent life insurance? Permanent life insurance is a type of policy that offers lifelong coverage. Unlike term life insurance, permanent policies have life insurance terms that do not expire after a certain period of time. This makes them ideal for those looking for financial protection beyond just their working years, such as retirement planning or estate planning. 

With permanent life insurance, you can choose between two main types: whole life and universal life.

Whole life insurance provides guaranteed premiums and death benefits over the policy’s duration, while universal life offers more flexibility over the premium you pay and how your coverage changes over time. 

Both types build cash value over time, allowing you to access money from your policy if needed in the future. To learn more about the difference between the two, check out our guide to whole vs. universal life insurance.

A permanent life insurance policy can also be used to provide additional coverage for your family, such as a spouse or children. This type of insurance may be used to help pay for funeral expenses, medical bills, and other costs associated with the death of a loved one. 

Furthermore, modified whole life insurance is also an option, especially when you are looking for life long insurances that has premiums offered. 

Read More: Modified Whole Life Insurance Explained

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How Permanent Life Insurance Works

How does permanent life insurance work? Permanent life insurance is a type of life insurance that provides coverage for your entire lifetime. It also accumulates cash value over time, allowing policyholders to access the money if needed. 

The cash value can be used to pay premiums, supplement retirement income, or provide an inheritance for beneficiaries when you pass away. 

Permanent life insurance policies are bought with one lump sum payment or through ongoing payments over time. In addition to providing financial security for yourself and your loved ones, permanent life insurance can also provide tax benefits. 

Is life insurance taxable? The cash value accumulated in the policy is typically sheltered from taxes, and any death benefit proceeds to beneficiaries are generally free of income tax liability.

What is the waiting period for life insurance? Typically, there is a waiting period before the policyholder can borrow against the savings portion of their policy. The length of this waiting period varies depending on the type of policy selected. For more information about the waiting period for life insurance, read further.

Cost of Permanent Life Insurance

How much does permanent life insurance cost? How much life insurance costs depends on a variety of factors, such as your age and health, the type of policy, and the coverage amount. Generally speaking, the younger you are when you get your policy, the lower your premiums will be; as you age, your premiums will increase. 

Your health can also affect the cost of life insurance; if you have any preexisting medical conditions or a history of risky behaviors such as smoking or drug use, these could increase the cost of premiums. 

The type and amount of coverage that is chosen also affects the overall cost. Policies with higher coverage amounts tend to have higher premiums than those with lower coverage amounts. 

To get an accurate estimate of permanent life insurance costs based on your individual circumstances, it is best to speak with a licensed insurance professional. They can help you determine the coverage amount most appropriate for your needs and provide quotes from multiple insurers so you can compare costs and find the best value. 

In addition to cost, it is important to consider other factors when selecting life insurance, such as the company’s financial strength ratings, customer service record, and policy features.

Here is a breakdown of the costs you can expect to pay for permanent life insurance.

Whole Life Insurance Monthly Rates by Age, Gender, & Coverage Level

Permanent Life Insurance vs. Term Life Insurance

When you are deciding on a life insurance plan, term vs. permanent life insurance is an important decision because they are two of the most common types of life insurance policies available. 

Permanent life insurance provides coverage that lasts your entire lifetime, while term life insurance is only active for a certain period of time, such as 10, 20, or 30 years. 

When deciding between permanent and term life insurance, it’s important to consider why you’re buying the policy in the first place. 

If you need coverage that will last as long as you’re alive, then permanent life insurance is likely a better option. This type of policy has a death benefit and cash value component, so it can also be used to help fund retirement or provide additional income for heirs and beneficiaries.

Term life insurance, on the other hand, is a good choice if you’re looking for a less expensive option or if you only need coverage for a certain amount of time. 

Term life insurance quotes are typically much less expensive than permanent life insurance quotes, and they provide coverage for a specified period of time, usually ranging from 10 to 30 years. 

When deciding between permanent vs. term life insurance, it’s important to consider your goals and the length of time you will need coverage. 

Permanent life insurance offers more long-term security and financial stability, while term life insurance can be more cost-effective for short-term needs. 

Read more: Flexible Premium Adjustable Life Insurance

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Pros and Cons of Permanent Life Insurance

Permanent life insurance isn’t for everyone. Here is everything you should consider before buying:

Pros: 

• Permanent life insurance provides lifelong coverage and will not expire as long as you keep paying the premiums. 
• It accumulates cash value over time, which can serve as a form of investment and can be borrowed against in times of emergency or financial need. 
• The death benefit associated with permanent life insurance grows over time, helping to provide more security for your loved ones after you are gone. 
• Permanent life insurance may offer tax benefits on both the income used to purchase it and any gains that accumulate from its cash-value growth.  
• You may have the option to add riders to your policy that can expand its coverage and add additional benefits such as a disability waiver or accelerated death benefits in certain circumstances.

Cons: 

• Permanent life insurance tends to be more expensive than other kinds of insurance since it builds cash value over time. 
• The cost of the premiums may become too high in later years, depending on your age and health status at the time you acquire the policy. 
• It may be difficult to surrender a policy after a few years if you find that it’s no longer suitable for your needs or budget constraints due to its long-term nature and the penalties associated with early withdrawal or surrendering a policy early. 
• Your beneficiaries may have difficulty accessing any accumulated cash value immediately after your death, as they will need to wait until the proceeds are released by the insurance company. 
• Permanent life insurance is a long-term commitment and requires significant premium payments over time, so it may not be suitable for those who have limited resources or a fluctuating income.

Four Types of Permanent Life Insurance

The four main types of permanent life insurance are whole life, universal life, variable life, and indexed universal life. 

Whole life is a type of policy that can provide protection for the insured’s entire lifetime as long as premium payments continue to be made. It also accumulates cash value over time. 

Universal life is a type of policy with an adjustable death benefit and flexible premiums that allows policyholders to change their coverage amount or premium payments throughout the policy’s term. 

Variable life insurance provides similar features to universal life but offers different investment options within its cash-value component. Furthermore, its cash value grows in accordance with the investments selected by the policyholder. 

Finally, indexed universal life insurance combines the features of universal and variable life insurance with the protection of a fixed rate of return based on an index such as the S&P 500. 

It provides flexibility similar to other types of permanent life insurance but carries less risk than variable life insurance. 

No matter what type you choose, permanent life insurance can provide insured individuals with financial security and peace of mind for years to come.

Cashing Out Your Permanent Life Insurance Policy

Can you cash out your permanent life insurance policy? The good news is that you can cash out your permanent life insurance policy. However, cashing out a policy can be a complicated process and is only sometimes the best option. 

First, it’s important to understand that when you surrender or cash out your policy, you receive only the cash value of the policy—not its face value (the amount listed on the policy). (For more information, read our “Life Insurance Face Value (Terms Explained)“).

In addition, if you surrender your policy early in the term of coverage, you may have to pay additional taxes and/or fees that could significantly reduce the amount of money received from cashing out. 

Finally, if you are considering surrendering your life insurance policy or cashing out a life insurance policy, it is essential to speak with an expert who has knowledge about tax implications prior to making any decisions.

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How to Buy the Best Permanent Life Insurance

If you’ve decided that permanent life insurance is best for you, the next step is choosing the best policy. Here are some important tips to follow when shopping for a policy. 

Consider Buying One Policy for Two Spouses

If you and your spouse are both looking to purchase permanent life insurance, consider buying a joint policy. This will save you money in the long run because it’s cheaper than two separate policies.

Shop Around

Don’t limit yourself to just one company when shopping for a policy. Compare prices and coverage from different insurers to make sure you’re getting the best deal possible. 

Understand All Types of Permanent Life Insurance Policies

There are several types of permanent life insurance policies available, including whole life, universal life, variable universal life, and indexed universal life. Make sure you understand all these different options before making a decision. 

Work With an Agent

Working with an experienced agent or financial advisor can be helpful when choosing the best policy. They can explain the different types of policies, compare prices from various insurers, and help you make an informed decision. 

Be Prepared to Make a Long-Term Commitment

Permanent life insurance is designed for long-term protection, so it’s important to be prepared to make a commitment to your policy. Be sure you can afford the premiums and are willing to stick with it for the long haul. 

It’s also wise to review your policy annually or whenever you experience a major life event such as marriage, divorce, or the birth of a child. This will ensure that your coverage still meets your needs. 

Determine Which Riders Are Best for Your Policy

What are insurance riders? Insurance riders are features you can add to your policy that provide extra protection. Common riders include accelerated death benefits, waiver of premium, and accidental death benefit riders. Determine which would be best for your policy based on your specific needs and budget.  (For more information, read our “Life Insurance vs. Accidental Death & Dismemberment (AD&D) Insurance: Which Is Better for You“).

Read the Policy Carefully

Before signing on the dotted line, read through your policy carefully and make sure you understand all the details. Ask questions if there’s anything you don’t understand or if something seems unclear.

Permanent Policies

What is a permanent policy? Permanent life insurance provides lifelong coverage. Although buying a permanent policy is generally more expensive than buying term life insurance, your rates will depend on which type of permanent life insurance policy you buy. Comparing policies can help you pick a policy that will suit you the best.

When it pertains to buying life insurance, permanent policies are some of the most common policy types available.

There are many different permanent life insurance types that offer lifelong coverage with varying benefits.

But what exactly is permanent life insurance and how does it differ from other types of life insurance?

In this guide, we’ll review everything you need to know about permanent policies and determine if a permanent policy is the right fit for you.

Looking for an affordable permanent policy? Enter your ZIP code to obtain free permanent policy quotes from the best companies in your area.

Permanent Life Insurance

What is permanent life insurance? Permanent life insurance is a type of insurance that offers lifelong coverage.

There are many different types of permanent life insurance and each policy has varying rates, benefits, disadvantages, and restrictions.

The most common type of permanent life insurance available is whole life insurance, but some other types include universal life insurance, variable universal life insurance, and variable life insurance.

Permanent life insurance can be expensive, but permanent policies provide more coverage and offer a wide variety of benefits that term life insurance doesn’t.

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Cost of Permanent Life Insurance 

How much does permanent life insurance cost? The cost to purchase a permanent life insurance policy will vary depending on which policy you buy. For example, buying a universal life insurance policy is often less expensive than purchasing a standard whole life insurance policy.

Aside from the type of policy you purchase, additional factors that can affect your rates are your age, your health status, your lifestyle, your profession, and your gender.

For example, a healthy 25- to 35-year-old non-smoking male would pay $27-$31 a month on average for a $500,000 term life insurance policy.

However, the same person buying a $500,000 whole life insurance policy would pay $350-$520 a month on average.

Main Differences Between Permanent and Term Life Insurance

What are the main differences between permanent life insurance and term life insurance? Regarding term versus permanent life insurance, it’s important to compare different policies and determine which one best matches your budget and coverage needs.

Term life insurance offers coverage for a set period of time before the policy expires. Typically, most term life insurance policies last between 10-30 years, but there are some that offer coverage for either a minimum of 5 years or a maximum of 40 years.

After the coverage period has ended, you will need to either convert your policy, renew your policy, or purchase another policy if you want to continue your coverage.

Term life insurance doesn’t have a cash value so it isn’t very useful for things like estate planning, but it is considerably less expensive than most permanent life insurance options.

By contrast, permanent life insurance provides coverage that lasts a lifetime, so you won’t need to renew or convert your policy.

Although permanent life insurance is more expensive to purchase, permanent policies also have additional benefits including a cash value, flexible payment options, and fixed rates.

Permanent life insurance also tends to be a more predictable policy than term life insurance.

However, because there are several different types of permanent life insurance, benefits will vary by policy.

Deciding to Buy Permanent Life Insurance

Should I buy permanent life insurance? Permanent life insurance is a good option for most people to consider.

However, the type of policy that will fit you best will depend on your budget and your coverage needs.

Permanent life insurance policies are good for individuals that want lifelong coverage with long-lasting benefits.

Permanent life insurance is generally more expensive, so you’ll have to consider your budget when deciding whether permanent life insurance is the right fit for you.

If you want permanent coverage but can’t currently afford to buy a permanent policy, convertible term life insurance is worth considering if you know that you’ll be able to afford a permanent policy in the future.

Although convertible term life insurance is a type of term life insurance, this policy allows you to convert to a permanent life insurance policy before your coverage period expires.

Permanent life insurance is a good option for most people to consider, but if you’re looking for a simple, short-term policy, term life insurance may be a better option for you.

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Case Studies: Exploring the Benefits of Permanent Life Insurance

Case Study 1: John and Sarah’s Lifelong Coverage

John and Sarah, a married couple in their early 40s, wanted to secure lifelong coverage for themselves and their children. They opted for a whole life insurance policy that provided guaranteed premiums and death benefits over the policy’s duration.

The cash value component of the policy allowed them to access funds for their children’s education expenses when needed. With permanent life insurance, they have peace of mind knowing their family is protected no matter what.

Case Study 2: Lisa’s Flexible Coverage

Lisa, a single professional in her 30s, wanted a life insurance policy that offered flexibility in terms of premium payments and coverage. She chose a universal life insurance policy that allowed her to adjust the death benefit and premium payments as her financial situation changed over time.

The cash value accumulation provided her with additional financial security and potential tax benefits. This type of policy fit her evolving needs and allowed her to customize her coverage accordingly.

Case Study 3: Mike’s Investment Options

Mike, an experienced investor, wanted to maximize the growth potential of his life insurance policy. He opted for a variable life insurance policy that offered different investment options within the cash value component.

This allowed him to select investments based on his risk tolerance and financial goals. With the potential for higher returns, he saw his life insurance policy as both protection for his family and a long-term investment opportunity.

Bottom Line on Permanent Life Insurance

Permanent life insurance offers lifelong coverage without the need to renew your policy.

Although permanent life insurance is more expensive to purchase than term life insurance, permanent policies generally have more benefits and higher coverage.

If you’re considering buying a permanent policy, comparing policies and rates can help you find the best option for you.

Before you purchase a permanent life insurance policy, enter your zip code to obtain free quotes from the best permanent policy companies in your area.

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