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.
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Daniel Walker
Licensed Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Licensed Insurance Agent
UPDATED: Jul 7, 2023
It’s all about you. We want to help you make the right life insurance coverage choices.
Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.
Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.
UPDATED: Jul 7, 2023
It’s all about you. We want to help you make the right life insurance coverage choices.
Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.
Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Permanent life insurance provides lifelong coverage
- The most common types of permanent life insurance are whole life insurance, universal life insurance, variable universal life insurance, and variable life insurance
- Permanent policy rates are higher than term life insurance rates, but your rates will vary depending on which type of permanent life insurance you purchase
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.
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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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.
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.
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 Permanent Life Insurance Options
Case Study 1: John’s Permanent Life Insurance Policy
John, a 40-year-old individual, decided to purchase a permanent life insurance policy to ensure lifelong coverage for his family. He compared different types of permanent policies and chose a whole life insurance policy.
With fixed premiums and a guaranteed death benefit, John felt confident in his choice. Although the policy was more expensive than term life insurance, John valued the additional benefits and long-term security it provided.
Case Study 2: Sarah’s Universal Life Insurance Policy
Sarah, a 35-year-old professional, wanted flexibility in her life insurance coverage. She opted for a universal life insurance policy that offered adjustable premium payments and death benefit amounts.
Sarah appreciated the ability to adapt her policy to her changing financial circumstances. While the premiums were still higher than term life insurance, the added control and potential cash value growth made it a suitable choice for her.
Case Study 3: Mark’s Variable Life Insurance Policy
Mark, a 50-year-old investor, was looking for a life insurance policy that allowed him to combine insurance coverage with investment opportunities. He chose a variable life insurance policy, which offered him the ability to invest his cash value in various investment options.
Mark understood the risks involved, as the death benefit and cash value could fluctuate based on the performance of his investments. However, he saw the potential for higher returns and liked the flexibility it provided.
What’s the 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 policy, enter your zip code to obtain free quotes from the best permanent policy companies in your area.
Frequently Asked Questions
What is a permanent insurance policy?
A permanent insurance policy is a type of life insurance coverage that provides lifelong protection as long as the premiums are paid. Unlike term life insurance, which covers a specific period (such as 10, 20, or 30 years), permanent policies remain in force for the insured person’s entire life.
How does a permanent insurance policy work?
A permanent insurance policy combines a death benefit with a cash value component. The death benefit is the amount paid to the beneficiaries upon the insured person’s death. The cash value is a savings or investment portion of the policy that accumulates over time. It grows tax-deferred and can be accessed by the policyholder through policy loans or withdrawals, which can be used for various purposes while the insured is still alive.
What are the main types of permanent insurance policies?
The main types of permanent insurance policies are whole life insurance, universal life insurance, and variable life insurance. Whole life insurance provides a guaranteed death benefit and fixed premiums. Universal life insurance offers flexibility in premium payments and death benefit amounts. Variable life insurance allows policyholders to invest their cash value in a selection of investment options, with the death benefit and cash value fluctuating based on investment performance.
What are the advantages of a permanent insurance policy?
Permanent insurance policies offer several advantages. Firstly, they provide lifelong coverage, ensuring that the death benefit will be paid regardless of when the insured person passes away. Secondly, the cash value component accumulates over time, offering potential tax-deferred growth and the ability to access funds for various purposes. Lastly, permanent policies often have level premiums, meaning the premium payments remain the same throughout the policy’s duration.
Are there any drawbacks to having a permanent insurance policy?
While permanent insurance policies offer many benefits, they also have some drawbacks. One of the main concerns is the higher cost compared to term life insurance. Permanent policies require larger premium payments due to the lifelong coverage and cash value component. Additionally, the cash value growth is typically modest compared to other investment options. It’s important to evaluate your financial goals and needs before deciding on a permanent insurance policy.
Your life insurance quotes are always free.
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Daniel Walker
Licensed Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.
