Permanent Life Insurance
What is permanent life insurance?
Alternative to term life insurance, permanent life insurance offers coverage which continues for the duration of the insured’s life.
Because the contract lasts so much longer, permanent insurance tends to cost much more than term insurance. However, the inherent security of permanent life insurance is that future health problems will not result in higher life insurance rates or uninsurability.
Cash value
Another advantage of permanent life insurance is its accumulation of cash value. Each policy contains an interest-bearing cash value account, which the policyowner can put to a variety of uses:
- an investment vehicle
- a source for a loan
- a source for an interest-free withdrawal
- collateral for another financial transaction
(Learn more about cash value life insurance.)
The relationship between your cash value and your life insurance policy depends on the type of permanent insurance you purchase.
Types of permanent life insurance
Whole life insurance—The simplest form of permanent life insurance.
Universal life insurance—A very flexible form of insurance. Premium payments require no consistency and may be paid whenever and in whatever amount the policyowner chooses, with little restriction.
Variable life insurance—Variable insurance gives the policyowner some responsibility for how his or her cash value is invested.
