What is permanent life insurance?
Permanent life insurance is a life insurance policy that gives you lifelong coverage, which never expires. There are three types of permanent life insurance policies: whole life insurance, universal life insurance and participating life insurance. All of these permanent policies come with a death benefit – this refers to the tax-free payment your beneficiaries will get after you die.
What are the benefits of permanent life insurance?
There are several perks to having a permanent life insurance plan, such as:
Tax-free death benefit
- Your beneficiaries get the money from the death benefit. They can use this money in any way they want. For example, they can use it to cover the cost of debts, mortgage or rent, child care, living essentials and any other expenses
Lifelong coverage
- You’ll get insurance that never expires. Some insurance plans, like term life insurance, offer coverage for a select number of years. But permanent life insurance plans have you covered all throughout your life. So there’s no need to ever renew your policy or worry about it expiring
Cash value
- You have a chance to grow your money with cash value. Some permanent life insurance plans also come with a savings portion called cash value, which can help you earn interest that’s tax-preferred (*“Tax-preferred” means you won’t have to pay tax on any interest earned unless you start withdrawing funds.) and grow your money over time. You can borrow from your cash value as a loan or withdraw funds from it. Please note that withdrawing from your cash value may reduce your policy’s death benefit
Premiums that won’t change
- Your premiums (monthly or annual fees) won’t rise over time. Most permanent insurance costs typically don’t increase from the time you first buy the policy. And some permanent insurance plans let you pay for a limited time and then never again