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Policy Types

3 benefits of permanent life insurance policies

While term insurance is extremely popular, there are good reasons to consider a permanent type of life insurance - including the potential for lifetime coverage.
Everyone's financial story is different. That is why there are different types of life insurance products to help you determine the best life insurance coverage to meet your needs. Just as car manufacturers create different models, each appealing to a different buyer; insurance companies offer a variety of products for each person's unique financial situation.

Could permanent life insurance be the right life insurance for you?

There are a few types of permanent* life insurance including whole life, universal life and variable universal life. Let's look at some common reasons to choose a permanent life insurance policy.

1. Permanent life insurance can earn cash value

All types of life insurance policies provide a death benefit to the beneficiaries; most of which are tax-free. However, permanent life insurance policies can earn cash value. That's in addition to the death benefit protection. The cash value can be borrowed from the policy as a policy loan. That gives a liquidity characteristic to a permanent policy. However, it should be noted that outstanding loans will accrue interest and reduce both the cash value and death benefit by the outstanding amount borrowed.

2. Permanent life insurance provides lifelong coverage

As long as the required premium is paid, a permanent policy only terminates when the insured dies or if the owner surrenders the policy. Some permanent policies mature at a stipulated age, commonly 100 or 121. If the insured is alive at 100, for example, premiums are no longer required but the death benefit will still be distributed when the insured dies. Some policies, however, simply disburse the cash value or pay out the death benefit if the insured lives to maturity.

3. Whole life insurance premiums never change

With whole life insurance, one type of permanent life insurance, the premium is guaranteed to never change. The declared premium when the policy is issued remains the same, regardless of the insured's age. A policy originally issued for $50,000 with a $500 annual premium, provides a $50,000 death benefit when the insured dies. It doesn't matter if the insured is 40 or 100; the death benefit doesn't change. Neither does the premium. The $500 premium stays the same as long as the policy is in-force.

While permanent life insurance may be more expensive compared to term life insurance, it also provides financial protection when the insured becomes deceased and it can gain a cash value that could be used during their lifetime.

If you're wondering how this applies to you, obtain a life insurance quote. If you're just starting out with a tight budget, you may be drawn toward inexpensive term life insurance policy. If your budget is flexible and you would like access to a life insurance policy's cash value, a permanent policy might be the better option. There's also the option of two policies: A term life insurance policy that protects loved ones with a higher death benefit for comparatively less premium, and a smaller permanent life insurance policy that could accrue cash value and provide lifelong coverage.

Now that you understand the important features of a permanent life insurance policy, continue to discuss your options with a financial professional to determine the best life insurance policy for your unique situation.


* As long as required premium payments are timely made.



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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective or its subsidiaries.

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