Permanent Life Insurance
Permanent life insurance provides coverage for your lifetime. There are several types of permanent life insurance, designed to meet different long term financial planning goals. Whether those goals include retirement planning, creating a financial safety net for your family in case something happens to you, donating money to charities or managing your estate, there is a life insurance plan that can be customized to your needs.
Facts About Life Insurance
- Approximately 95 million adult Americans have no life insurance
- Many professionals recommend that you should have at least 10 times your gross annual income as the minimal amount of life insurance coverage
- The average recommended life insurance coverage is $405,840 dollars
Your specific life insurance needs are unique. Averages and statistics can help you think about what to expect, but your insurance agent will help you get a clearer idea of what your coverage should include.
What Is Permanent Life Insurance?
Permanent life insurance provides a way to secure yourself financially in the long-term while also providing insurance protection for your family. This form of life insurance has several important features that are not found in Term Life Insurance.
The main difference between term life and permanent insurance is that term insurance only pays death benefits to your beneficiaries, while permanent life insurance pays out death benefits and accumulates cash value which will continue to build up over the life of the policy.
There are other attractive features of a permanent life insurance policy as well. For example:
- It can offer life insurance coverage up to age 100.
- It can be a vehicle for estate planning, trusts, or business planning.
- It provides a tax deferred cash value accumulation plan.
- You can choose locked premiums (whole life), or adjustable premiums (universal life) for the life of the policy.
- You can borrow against a percentage of the accumulated cash value as needed.
Permanent life insurance policies can meet several different financial planning objectives:
- Provide for long term life insurance needs, even for those who start young
- Provide your family with replacement income when the primary income earner passes away
- Cover your mortgage, debts, and funeral expenses
- Enhance other retirement planning investment strategies
- Assist with estate and legacy planning
- Provide cash flow to cover expenses in retirement
Types of Permanent Life Insurance
There are several types of permanent life insurance, but the two most common policy types offer the most options. These are:
These life insurance plans have some common features, but there are also some significant differences.
Features of Whole Life Insurance
The main features of whole life insurance include:
- Tax deferred death benefits
- Level premiums for the life of the policy
- Cash value accumulation
Features of Universal Life Insurance
The main features of universal life insurance include:
- Tax deferred death benefits
- Flexibility to customize your coverage
- Options for ways to tailor your premiums