Permanent life insurance insures that policyholders will be able to provide financially for the people who survive them throughout their entire lives; it also gives people the opportunity to invest a portion of their premiums into an investment portfolio that will give them a high return on this investment. The best thing about permanent life insurance is the fact that it is a policy that will remain active throughout the policyholder’s entire life meaning that it never expires. Policyholders never need to decide whether or not to renew the policy, and their families will be protected against the loss of their salaries their entire lives.

The Advantages Permanent Life Insurance Offers

It cannot be reiterated enough that the best thing about permanent life insurance is that it is permanent. The policy doesn’t require that the policyholder do anything, and it will continue to increase in value as time goes by. The other great thing is that the premiums that are set at the beginning of the policy will remain in effect until the very end.

As the cash value is increasing, policyholders have a growing asset that they can borrow against if they ever need money to fund their children’s college education. If they do not withdraw any money, the growing cash value increases the survivors’ death benefits.

Finally, the cash value can grow at a tax-deferred rate because the interest or the dividends earned are not taxed. If they make withdrawals, this money is also free from taxation.

The Disadvantages of Permanent Life Insurance

The main thing that keeps people from purchasing permanent life insurance is the fact that term life insurance is a much more affordable product. Permanent life insurance requires that policyholders commit to paying premiums that are much higher than term insurance, and not everyone can do this. If policyholders do opt to purchase a permanent life insurance, they often try to make it more affordable by purchasing less insurance; this leaves them without adequate coverage for their circumstances.

Permanent life insurance is also much more difficult to qualify for because applicants need to submit to a physical examination, present several different documents and give extensive personal information about their own medical history as well as their family’s history.

Although people are allowed to withdraw funds from the cash value, they are required to pay this money back. If they fail to do so before they pass away, the insurance company will subtract the amount owed from the beneficiaries’ death benefits.

Common Types of Permanent Life Insurance

People will find that they will be able to choose one of four different types of permanent life insurance.

1. Whole Life: With whole life, the premiums will remain the same from the beginning of the policy until the end. Upon the policyholder’s death, the beneficiaries receive death benefits as well as a savings account.
2. Universal Life: This policy allows policyholders flexibility with the option of changing their premiums when they need to and altering the death benefits when it seems appropriate.
3. Variable Life: Variable life gives policyholders life insurance coverage as well as an investment portfolio that is invested in money market funds, stocks or bonds.
4. Variable-Universal Life: Variable-Universal combines the attributes of both the variable life and the universal life insurance policies.

The Best Candidates for Permanent Life Insurance

The best candidates for permanent life insurance are those who know that they have a long term interest in having life insurance coverage. The other group well-suited for permanent life insurance is those who want an investment portfolio that will fund their children’s schooling, their own retirement funds or anything else they can think of.

Is the Cost of Permanent Life Insurance Worrisome?

As time goes by, permanent life insurance actually becomes less expensive than term life insurance because it doesn’t need to be renewed and the premiums remain the same throughout the policy. But, it is much more expensive in the beginning. If the price is out of reach, term life insurance provides the policyholders’ families with death benefits without the investment portion. People who choose term life can still have an investment portfolio; they can fund it with the money term life insurance saves them and invest it in an investment firm. This option could actually give them a better rate-of-return.

To see a comparison between term life insurance and permanent life insurance, go to the Term Life vs. Permanent Life webpage.