Permanent life insurance is a set of policies which cover the insured’s entire lifespan, under the condition that premiums get paid on a continual basis. Therefore, regardless of whether the insured died immediately after purchasing cover died years later, his/her beneficiaries would still be eligible for a death benefit. Additionally, most permanent life insurance policies include a cash value component which is more or less like an investment account that allows borrowing or withdrawing from the policy’s cash value as soon as it becomes a large sum. Whole and universal life insurance are examples of permanent life insurance policies that provide lifelong coverage to policyholders, while typically offering a cash value component that steadily grows over time, allowing the policyholders to acquire loans from the insurer or pay premiums. Even though term insurance is quite popular among most people, there are still plenty of benefits to be reaped from permanent life insurance. Below are some reasons why you should consider permanent life insurance policies.
As mentioned earlier, permanent life insurance policies include a cash value component. It is true that all kinds of life insurance offer a death benefit to the insured’s beneficiaries, which are often tax-free. Typically, permanent life insurance policies include a cash value component which acts as protection in addition to the death benefit provided to beneficiaries. The benefit of this additional component is that it can be borrowed from the policy as a loan. Through this component, the permanent life insurance policy is given a liquidity characteristic. However, it is necessary to remember that the cash value and death benefit are significantly reduced based on the amount borrowed.
It is quite obvious that policyholders of permanent life insurance policies receive lifelong coverage. So long as the agreed premiums are paid, permanent life insurance policies only terminate upon the death of the policyholder or if they choose to surrender the policy. On that note, some permanent life policies mature at specified age, usually 100 or 121 years. If the insured happens to still be alive at the stipulated maturity age, premiums are no longer required to be paid, but the death benefit still has to be distributed upon death of the insured. However, other policies simply disperse the death benefit of cash value if the insured is still living at the stipulated maturity age.
A key benefit of whole life insurance policies is that the premiums required to be paid never change. The premium declared upon issuing of the policy stays the same regardless of the policyholder’s age.