Permanent life insurance is a type of life insurance that provides coverage for the entire lifetime of the insured, as long as the premiums are paid. There are different types of permanent life insurance, such as whole life insurance, universal life insurance, and variable life insurance. Key features of permanent life insurance include:
1. Lifetime Coverage: Unlike term life insurance, which provides coverage for a specific period, permanent life insurance offers coverage for the entire lifetime of the insured.
2. Cash Value: Permanent life insurance policies have a cash value component, which grows over time and can be accessed by the policyholder through withdrawals or loans.
3. Premiums: Premiums for permanent life insurance are typically higher than term life insurance but remain level throughout the life of the policy.
4. Death Benefit: Upon the death of the insured, the policy pays out a death benefit to the beneficiaries.
5. Flexibility: Some permanent life insurance policies offer flexibility in premium payments and death benefit options.
How it works: When you purchase a permanent life insurance policy, you pay regular premiums to the insurance company. A portion of these premiums goes towards the cost of insurance, while the remaining amount goes into the cash value component. Over time, the cash value grows on a tax-deferred basis, and you may have the option to access this cash value during your lifetime. The death benefit is paid out to the beneficiaries upon the death of the insured. It's important to review the terms and conditions of the policy, as well as the potential risks and benefits, before choosing a permanent life insurance policy. Consider consulting with a financial advisor or insurance specialist for personalized guidance.