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Life Insurance Basics
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Types of Life Insurance
What are the types of term insurance policies?
What are the different types of permanent policies?
 Why should I purchase permanent insurance?
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Buying & Saving Money
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Special Buying Situations
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Keeping Your Life Insurance Current
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Help
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Facts
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Life Insurance News Feed |
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A permanent life policy provides lifelong insurance
protection. The policy pays a death benefit if you die tomorrow or if
you live to be a hundred. There is also a savings element that will grow
on a tax-deferred basis and may become substantial over time. Because of
the savings element, premiums are generally higher for permanent than
for term insurance. However, the premium in a permanent policy remains
the same, while term can go up substantially every time you renew it.
There are a number of different types of permanent insurance policies,
such as whole (ordinary) life, universal life, variable life, and
variable/universal life. In a permanent policy, the cash value is
different from its face value amount. The face amount is the money that
will be paid at death. Cash value is the amount of money available to
you. There are a number of ways that you can use this cash savings. For
instance, you can take a loan against it or you can surrender the policy
before you die to collect the accumulated savings.
There are unique features to a permanent policy such as:
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You can lock in premiums when you purchase the
policy. By purchasing a permanent policy, the premium will not
increase as you age or if your health status changes.
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The policy will accumulate cash savings.
Depending on the policy, you may be able to withdraw some of the
money. You also may have these options:
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Use the cash value to pay premiums. If
unexpected expenses occur, you can stop or reduce your premiums.
The cash value in the policy can be used toward the premium
payment to continue your current insurance protection –
providing there is enough money accumulated.
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Borrow from the insurance company using the
cash value in your life insurance as collateral. Like all loans,
you will ultimately need to repay the insurer with interest.
Otherwise, the policy may lapse or your beneficiaries will
receive a reduced death benefit. However, unlike loans from most
financial institutions, the loan is not dependent on credit
checks or other restrictions.
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Insurance Information Institute,
Inc. - ALL RIGHTS RESERVED
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