What Is Permanent Life Insurance

Permanent life insurance is one type of life insurance policy, and there are advantages and disadvantages to this coverage. Term life only covers for a specific term period, and this will depend on the term of the policy chosen. Term life may cover you from one year, ten years, or thirty years, but the same policy does not cover you through your entire life. With term life once the term is up then the insurance policy is no longer effective, and all of the premiums you paid in are lost. With permanent life insurance this is not the case, and the coverage is intended to be permanent and cover you for the rest of your life. As long as you pay the premiums when they are due then your coverage never ends.

Almost all of these options include either a savings component or an investment component, and these policies may also be referred to as cash value policies, because they build up a cash value over time. This type can include whole life, variable life, and even hybrids that offer different components to customize your life insurance policy.

Permanent life insurance costs more than term life does, but in exchange you receive other benefits as well. The cash value of the policy can build to a substantial amount, and loans can be taken out using this value as collateral. The cash value can also be withdrawn from the account as well. This portion of the policy represents your money. Care should be used when withdrawing the cash value from a permanent life insurance policy though, because the policy may be terminated if the premiums are not paid on time. With a cash value, the premiums can usually be deducted if you do not make the payment, but if the policy has no cash value because of withdrawals then this is not the case. The only way that permanent life insurance can be terminated is if the premiums are not paid on time. An exception to this rule is if you are not truthful on the application and this deception is found out. Always answer all questions honestly, and as completely as possible.

Permanent life insurance offers more than just basic insurance in case you pass away. This is a savings and investment vehicle as well. If you want a policy that will only cover you for a specified period, and you do not want any extra benefits, then term life is probably the best choice for you. If you want life insurance that is in effect as long as you are around, then permanent may be a better option. Permanent life insurance can be ideal if you want life insurance and you want additional financial benefits to go along with the package. You must look at all the factors and circumstances in your unique situation, and determine whether you want coverage for the rest of your life or if you are only worried about the next ten years, while you still owe mortgages, college expenses, and other debts. Permanent life also offers level premiums, and with term you must start a new policy, with higher premiums, once the term ends.