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What Is Permanent Life Insurance?
Once you have determined that you need life insurance, and calculated how much coverage you require, you will have to choose between several types of life insurance. Generally, there are two very different types of life insurance contracts - term and permanent. Permanent Life Insurance Overview As the name implies, permanent (cash value) insurance is best suited for the individual with a long term (often indefinite) need. A permanent policy is really a combination of "pure insurance" and a cash value component. Premiums are considerably higher than term rates in the beginning years, and may include an increasing death benefit, a "cash value" associated with the policy, and tax-advantaged borrowing privileges against your cash value. There are two basic types of permanent insurance. Each has its own benefits and disadvantages which must be weighed careful. |
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Whole Life Insurance
A form of permanent life insurance, whole life insurance features guaranteed premiums, death benefits, and cash value. Whole life insurance policies also give you the potential to receive dividends, which can increase the value of the policy when the insured is living or provide an increased death benefit for your beneficiaries.
Initial premiums are higher compared to term insurance premiums, but eventually they may become lower than the premiums you would pay if you had kept renewing a term policy.
Universal Life Insurance
Today’s Universal Life polices provide the flexibility to build your policy's cash value or focus more on guaranteed protection (no lapse guarantees).
Choose from two policy designs:
A form of permanent life insurance, whole life insurance features guaranteed premiums, death benefits, and cash value. Whole life insurance policies also give you the potential to receive dividends, which can increase the value of the policy when the insured is living or provide an increased death benefit for your beneficiaries.
Initial premiums are higher compared to term insurance premiums, but eventually they may become lower than the premiums you would pay if you had kept renewing a term policy.
Universal Life Insurance
Today’s Universal Life polices provide the flexibility to build your policy's cash value or focus more on guaranteed protection (no lapse guarantees).
Choose from two policy designs:
- Guaranteed Protection lets you choose the length of the protection guarantee and the premium payment schedule up front-both are then guaranteed not to change so long as the premiums are paid as planned.
- Cash Accumulation allows you to change, within limits, your premium payments and death benefit. It also allows you to set aside additional money in a tax-deferred way to help you meet long-term financial goals.