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7 Key Features of Permanent Life Insurance

Are you seeking a comprehensive life insurance policy offering lifelong coverage and benefits? Look no further than permanent life insurance. With its unique features, this policy not only provides protection but also a sense of security and peace of mind for you and your loved ones.

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This article will explore the seven key features of permanent life insurance that make it a valuable investment. From cash value accumulation to flexibility in premium payments, permanent life insurance offers a range of benefits that set it apart from other types of coverage, providing long-term financial security.

Whether planning for your family’s future or building a financial legacy, understanding the critical features of permanent life insurance is essential. For instance, you can use the cash value accumulation feature to leave a substantial inheritance for your loved ones. By the end of this article, you will understand why this type of policy might be the right choice for you.

So, if you are ready to delve into permanent life insurance and discover its unique advantages, let’s explore the seven key features that make it an attractive choice for long-term financial planning.

Understanding permanent life insurance

Permanent life insurance is a type of life insurance policy that provides coverage for the policyholder’s entire lifetime, as opposed to term life insurance, which offers coverage for a specific period. Unlike term life insurance, which expires at the end of the policy term, permanent life insurance remains in effect as long as the premiums are paid. This makes it a valuable tool for long-term financial planning and ensuring that your loved ones are protected even after you’re gone.

Permanent life insurance policies come in various forms, including whole and universal life insurance, each with unique features and benefits. These policies are designed to provide a death benefit to your beneficiaries and the opportunity to accumulate cash value over time. The cash value can be accessed through loans or withdrawals, providing financial flexibility and a source of supplementary income during your lifetime.

Understanding permanent life insurance’s key features and benefits is crucial when considering your life insurance options. This type of policy offers a range of advantages, from lifelong coverage to the potential for wealth accumulation, making it a valuable investment for individuals and families looking for a comprehensive and long-term financial solution.

Pros and cons of permanent life insurance

permanent life insurance pros and cons

Overwhelming experience is part of the process as you shop for your future life insurance that best suits your needs. There are only two options for you.

You can choose either to buy permanent life insurance or a term plan. Before you decide, you must find out how each option can help with your future financial needs and goals. Also, it is helpful to dig deeper into each policy to know what it can offer.

With Term plans, beneficiaries are secured in case of the insured’s untimely demise, but it will not accumulate any cash value and without any investment. You can only benefit from it if you pass away before the term expires.

If nothing happens within the period before it expires, you only get peace of mind that you are healthy and safe. 

Policyholders of term life plans can get a coverage limit of 10, 20, 30, and 40 years. However, as you age, the more expensive the monthly premiums you need to pay become. Overall, this is very affordable insurance, especially for younger ones.

For instance, a 30-year-old male non-smoking insured can get $200,000 in insurance coverage for 15 years with no medical examination as a requirement and pays less than $18 per month. 

Permanent life insurance policies or cash value policies can offer payout in case of the insured’s death and investment that incurs cash value over time.

Insurance agents can provide different policies like universal, whole life, or variable life insurance policy. All of these options offer an investment feature. Many financial experts prefer to use something other than permanent life insurance as an investment.

Benefits of permanent life insurance

One of the primary advantages of permanent life insurance is the lifelong coverage it provides. Unlike term life insurance, which expires at the end of the policy term, permanent life insurance remains in effect as long as the premiums are paid. This means that your loved ones will be protected, regardless of when you pass away, providing them with the financial security they need during a difficult time.

Another significant benefit of permanent life insurance is the cash value accumulation feature. As you pay your premiums, a portion of the money is set aside and invested, allowing the cash value to grow over time. This cash value can be accessed through loans or withdrawals, providing a source of supplementary income or a financial safety net in times of need. The cash value can also be used to pay premiums, ensuring that your coverage remains in place even if you encounter financial difficulties.

Permanent life insurance also offers tax advantages that can make it an attractive investment. The death benefit paid to your beneficiaries is generally tax-free, and the cash value growth is typically tax-deferred, meaning that you won’t have to pay taxes on the money until you withdraw it. This can be particularly beneficial for individuals who are looking to build wealth and create a lasting financial legacy for their loved ones.

Types of permanent life insurance policies

There are two main types of permanent life insurance policies: whole life insurance and universal life insurance. Each type has unique features and benefits, so it’s essential to understand the differences between them to determine which best suits your needs and financial goals.

Whole life insurance is the most traditional form of permanent life insurance. It provides a guaranteed death benefit and a fixed premium that remains the same throughout the policy’s life. The cash value in a whole-life policy grows at a fixed, guaranteed rate, providing policyholders with stability and predictability. Whole life insurance is often considered a more conservative investment option, making it a popular choice for individuals who value long-term financial security.

On the other hand, universal life insurance offers more flexibility in terms of premium payments and death benefit amounts. With a universal life policy, you can adjust your premiums and the amount of coverage based on your changing needs and financial circumstances. The cash value in a universal life policy grows at a variable rate, potentially providing higher returns than a whole life policy, but also carries more risk. Universal life insurance is often preferred by individuals who value the flexibility to adapt their coverage as their life and financial situation evolve.

Cash value accumulation in permanent life insurance

types of permanent life insuranceOne of the most significant features of permanent life insurance is the ability to accumulate cash value over time. As you pay your premiums, a portion of the money is set aside and invested, allowing the cash value to grow on a tax-deferred basis. This cash value can be accessed through loans or withdrawals, providing a source of supplementary income or a financial safety net.

The rate at which the cash value grows depends on the type of permanent life insurance policy you have. In a whole-life policy, the cash value grows at a fixed, guaranteed rate, providing stability and predictability. In a universal life policy, the cash value grows at a variable rate, which can provide higher returns but carries more risk.

The cash value in a permanent life insurance policy can be a valuable asset, as it can be used to pay premiums, supplement your retirement income, or even be borrowed to fund other financial goals. Additionally, the cash value growth is typically tax-deferred, meaning you won’t have to pay taxes on the money until you withdraw it. This can make permanent life insurance an attractive investment option for individuals looking to build wealth and create a lasting financial legacy.

Premiums and payment options for permanent life insurance

is permanent life insurance worth itOne key consideration when it comes to permanent life insurance is the premium payments. Unlike term life insurance, where the premiums are typically lower but the coverage expires at the end of the policy term, permanent life insurance premiums are generally higher, but the coverage remains in effect for the policyholder’s lifetime.

However, permanent life insurance policies offer more flexibility regarding premium payments. With whole life insurance, the premiums are fixed and remain the same throughout the policy’s life. This can provide stability and predictability, as you’ll know exactly how much you must pay monthly or yearly to maintain your coverage.

With universal life insurance, on the other hand, you have more flexibility in terms of your premium payments. You can pay higher premiums to increase the death benefit or lower premiums to reduce coverage. This flexibility can be beneficial if your financial situation changes over time, as you can adjust your premiums accordingly to ensure that your coverage remains in place.

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Riders and additional features in permanent life insurance

permanent life insurance investmentIn addition to the core benefits of permanent life insurance, many policies offer a range of riders and additional features that can enhance coverage and provide even more value for policyholders. These riders and features can be added to your policy for an additional cost, but they can provide significant benefits depending on your specific needs and goals, giving you the power to tailor your policy to your unique circumstances.

One everyday rider is the accelerated death benefit, which offers a comforting safety net. It allows you to access a portion of the death benefit if you are diagnosed with a terminal illness or require long-term care. This can provide much-needed financial support during a difficult time and help you cover medical expenses or other costs associated with your condition.

Another popular rider is the disability income rider, which provides a source of income if you become disabled and cannot work. This can help you maintain your financial stability and continue making your premium payments, ensuring your coverage remains in place, and giving you the peace of mind that your policy will continue to protect you even in challenging times.

Factors to consider when choosing permanent life insurance

permanent life insurance cash valueWhen choosing a permanent life insurance policy, several factors must be considered to ensure that you select the right coverage for your needs and financial goals. One of the most important factors is the death benefit amount, which should be sufficient to provide for your loved ones’ financial needs in the event of your passing.

Another critical factor to consider is the premium payments. As mentioned earlier, permanent life insurance premiums are generally higher than term life insurance, but they offer the advantage of lifelong coverage. It’s important to carefully review the premium schedule and ensure that the payments are within your budget and that you can maintain the coverage over the long term.

The cash value accumulation feature is also crucial when choosing a permanent life insurance policy. Depending on your financial goals, you should prioritize policies with higher potential for cash value growth, which can provide a valuable source of supplementary income or financial flexibility.

Comparing permanent life insurance with term life insurance

Many people face the choice between permanent and term life insurance when it comes to life insurance. Both policies offer unique benefits and features, and the choice ultimately depends on your needs and financial goals.

One primary difference between permanent life insurance and term life insurance is the duration of coverage. As the name suggests, permanent life insurance covers the policyholder’s entire lifetime as long as the premiums are paid. On the other hand, term life insurance offers coverage for a specific period, typically 1 to 30 years.

Another key difference is the premium structure. Permanent life insurance premiums are generally higher than term life insurance premiums, but they remain level throughout the policy’s life. Term life insurance premiums, on the other hand, are typically lower initially but may increase as the policyholder ages.

How to apply for permanent life insurance

Applying for permanent life insurance is straightforward, but it is essential to be prepared and understand the requirements. The first step is to determine the amount of coverage you need, considering factors such as your income, debts, and the financial needs of your loved ones.

Once you’ve determined the appropriate coverage amount, you must choose between the two main types of permanent life insurance: whole life and universal life. As discussed earlier, each type has its unique features and benefits, so it’s essential to carefully consider your needs and financial goals before making a decision.

The next step is to gather the necessary information and documentation, which may include your personal and financial information and details about your health and lifestyle. You’ll then need to complete an application and undergo a medical examination, typically required to assess your risk and determine the appropriate premium rates.

Permanent life insurance is a valuable investment that offers a range of benefits for individuals and families looking for comprehensive and long-term financial protection. From lifelong coverage to the potential for cash value accumulation, the critical features of permanent life insurance make it a compelling choice for those who want to ensure their loved ones are cared for, even after they’re gone.

Whether you choose a whole life or universal life policy, permanent life insurance’s flexibility and tax advantages can make it an attractive option for various financial goals, from retirement planning to wealth building. By understanding this type of coverage’s unique features and benefits, you can make an informed decision and take the first step towards securing your family’s financial future.

Frequently Asked Questions

How does permanent life insurance work?

Permanent life insurance is a type of life insurance that provides coverage for the insured's entire lifetime as long as premiums are paid. It also includes a savings component, known as cash value, which grows over time and can be borrowed against or used to pay dividends; unlike term life insurance, which only covers a set period, permanent life insurance is designed to provide lifelong protection and can be a valuable tool for estate planning and leaving a legacy.

Why is permanent life insurance bad?

Permanent life insurance can be expensive and may only be necessary for some. It also has a cash value component that may provide different returns than other investment options. Additionally, some people may not need life insurance coverage for their entire life, making term life insurance a more cost-effective option. However, permanent life insurance offers lifelong range and can be a good option for those who need it.

What is the difference between term and permanent life insurance?

Term life insurance provides coverage for a specific period, usually 10-30 years, and pays out a death benefit if the insured dies during that time. On the other hand, permanent life insurance provides coverage for the insured's entire life and includes a savings component that can accumulate cash value over time. Permanent life insurance is typically more expensive than term life insurance but offers more comprehensive coverage.

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About Coach B.

After starting his financial career with Phoenix Home Life Insurance Company back in 1992, Scott decided he wanted to provide people with an easier and more enjoyable way to buy life insurance. That was the start of Coach B. Life Insurance, whose mission is to be transparent, honest, and helpful to customers — without ever bugging or pushing them.

In the years since then, he has worked tirelessly to improve the process of shopping for insurance. His goal is to make sure that everyone who comes to Coach B. — whether they end up buying a policy or not — has the best possible experience.


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