Permanent Life Insurance: Key Features of Permanent Life Insurance

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Five Key Features of Permanent Life Insurance

When considering whether a permanent life insurance policy—such as whole life insurance and universal life insurance—is right for you, there are many features to consider. These policies are designed to last your lifetime and offer a cash value component, but those are just two of the various benefits of this coverage type. Read on to learn more about the key advantages of permanent life insurance.

1. Permanent Insurance Earns Cash Value

The primary benefit of life insurance is that your loved ones will be protected financially in the event of your death. Permanent life insurance, however, has the additional benefit of a cash value component that grows over time. You can simply let the cash value accumulate, borrow against it, or even use it to pay your policy’s premiums. Keep in mind that the cash value is separate from the death benefit, so depending on your policy, the cash value may not be distributed to your beneficiaries. If that is your wish, make sure you speak with your insurance carrier to understand your options.

2. Permanent Insurance Provides Coverage for Life

As the name indicates, permanent life insurance is permanent, providing coverage to last your entire lifetime. As long as your premiums are paid, the policy will only end when you pass away or surrender the policy. This makes it a great option for those who prefer constant, long-term life insurance coverage. You won’t have to worry about renewing or converting your policy upon an expiration date.

3. Permanent Insurance has Tax Benefits

Both term life insurance and permanent life insurance provide a death benefit to beneficiaries free of income tax. Permanent, however, has a few tax benefits that aren’t always available with term policies:

The cash value for permanent life insurance is tax-deferred, similar to the gains of a retirement account
If you receive dividends or cancel your permanent life insurance coverage, there are no income taxes unless the amount of money you receive is more than the amount you’ve paid in premiums
There are no taxes if you take out a policy loan as long as the policy remains in effect

4. Permanent Life Insurance Can Provide a Pre-Planned Inheritance

Permanent life insurance provides a tax-free death benefit to any beneficiary you choose. If you have your financials well in order and aren’t worried about ongoing payments like a mortgage or college tuition, learning more about how permanent life insurance can help you provide a pre-planned inheritance could be beneficial. Oftentimes, you can provide your beneficiaries with the financial resources from your life insurance policy without having to take from your retirement or other savings.

5. Permanent Life Insurance Premiums Don’t Change

One of the most significant benefits of permanent life insurance is that the premium never changes. As long as the premium is paid, you will be covered. This means your rates won’t be impacted by changes to your health or lifestyle. It also helps you plan and budget for the cost of life insurance, as you’ll know exactly what you owe, whether you opt for a monthly, quarterly, or annual payment schedule.

1. Permanent Insurance Earns Cash Value

The type of life insurance you have will directly affect the cost of the policy.

One of the prominent reasons to purchase a life insurance policy is to ensure your loved ones receive a death benefit at the time of your passing. Permanent life insurance, however, also earns a cash value which can be borrowed from the policy. Some permanent life insurance policies will let you pay premiums using the cash value and if you were to ever give up your coverage, you should be able to get the cash value back depending on how far into the coverage you are. It’s important to note, though, that the cash value is separate from the death benefit, so depending on your policy, your beneficiaries may not receive any of the cash value.

2. Permanent Insurance Provides Coverage for Life

As the name gives way to, permanent life insurance is permanent, providing coverage for the span of your lifetime. As long as the premium is paid, the policy will only end when the insured passes away or surrenders the policy.

3. Permanent Insurance has Tax Benefits

Both term life insurance and permanent life insurance provide a death benefit to beneficiaries free of income tax. Permanent, however, has a few tax benefits that aren’t always available with term:

The cash value for permanent life insurance is tax-deferred, similar to the gains of a retirement account
If you receive dividends or cancel your coverage permanent life insurance coverage, there are no income taxes unless the amount of money you receive is more than the amount you’ve paid in premiums
There are no taxes if you take out a policy loan as long as the policy remains in effect

4. Permanent Life Insurance Can Provide a Pre-Planned Inheritance

Permanent life insurance provides a tax-free death benefit to any beneficiary you choose. If you have your financials well in order and aren’t worried about ongoing payments like a mortgage or college tuition, learning more about how permanent life insurance can help you provide a pre-planned inheritance could be beneficial. Oftentimes, you can provide your beneficiaries with the financial resources from your life insurance policy without having to take from your retirement or other savings.

5. Permanent Life Insurance Premiums Don’t Change

One of the most significant benefits of permanent life insurance is that the premium never changes. As long as the premium is paid, you will be covered. This means your rates won’t be impacted by changes to your health or lifestyle. It also helps you plan and budget for the cost of life insurance, as you’ll know exactly what you owe, whether you opt for a monthly, quarterly, or annual payment schedule.

Let SelectQuote Help You Find the Right Life Insurance

If you think a permanent life insurance policy might be the right fit for you, we can help. We’ll make the process easy by taking the extensive legwork off your hands. In just minutes, our proprietary technology allows us to gather a variety of plan details and quotes from trusted carriers, helping you explore your options to find the right life insurance coverage for your needs.

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