Permanent life insurance is something that everyone who cares about their health should consider. Both whole life and endowment policies can come in this form of policy. As long as someone stays current with their insurance policy premium payments, permanent life insurance is guaranteed to pay out at the end of the policy. Permanent life insurance also accrues a cash value as well, making it a suitable option for people who like to withdraw money from their policy prematurely.
The money withdrawn from these policies can be used for anything. Clothes, cars, college, anything they want. There are many reasons that are good excuses to dip into the policy early. The fact that the policy is permanent is one of the most attractive features. Many people from all over the world are taking out these types of policies and rejoicing when they pay out.
In a permanent life insurance policy, it doesn't matter when the insured dies. The policy is set to be in effect for the life of the individual. Normally, the insured dies and the payout from the policy is awarded to the beneficiary, as named on the policy itself. Fairly simple!
The two main forms of permanent life insurance is whole and universal life.
Whole Life Insurance Whole life insurance is a permanent type of insurance. People got tired of taking out term policies that required them to die within the term. Whole life insurance is good for the "whole life" of the insured person.
Universal Life Insurance These type of insurance policies also carry a cash value. The additional payments made to the policy accrue in the form of money that can be withdrawn against the policy at any time. Interest is earned on these types of policies as well. These interest amounts can be pegged to a financial index in order to make more money. There are many uses for universal life insurance and it's reach goes far beyond traditional death and payment schematics. Instead, people use these insurance policies to make smart moves with their money.
There are also different types of permanent life insurance as well. Several, actually. Six in total! Take a look below at the many different types of permanent life insurance available to you. The right types of permanent life insurance can fit your individual situation perfectly, so check out what each one has to offer. The following are part of whole life insurance policies.
- Non-participating A non participating policy doesn't allow for additional profits to be shared with the insured. If the insurance company does well for the year, it retains the difference that a participating insurance policy would pay out.
- Participating Participating whole life insurance policies pay out refunds to their participants if the company does well for the year. These refunds are not taxable and participants get the full amount.
- Indeterminate Premium This is just like a non-participating policy, except that the premium amounts may vary from year to year. However, this premium amount is guaranteed to not increase to above the set amount in the policy terms.
- Economic This is a combination of term and participating life insurance. Part of the dividends that would otherwise be awarded to the insured are used to purchase higher amounts of term insurance. Usually, a higher death benefit is accrued using this method but the cash value drops at the same time. Dividends do not always perform up to expectations, resulting in a lower amount of death benefit.
- Limited Pay This type of insurance policy is just like a participating policy and as the name implies, premium payments are only made for a certain number of years. 20 is a common term. Upon the occurrence of a certain age, the policy can be scheduled to be paid up in full but continue to pay out for the remainder of the insured’s life. These policies are more expensive. Why? Because the policy has to be built up to be able to pay for the years when no premiums are due!
- Single Premium As the name implies, a single premium payment is made to fund the entire life of the policy. If the policy is cashed in early, fees apply to the policy holder.
- Interest Sensitive This is a fairly new type of insurance policy. It's a combination of traditional whole life and universal life. The interest amount attached to the cash value of the policy will vary with the current market conditions. Just like in whole life policies, the death benefit is good for the life of the policy. Premium payments on this type of policy can vary but not above the set amount in the policy terms.
Many people don't know much about the many different types of permanent life insurance. Most people are just not as informed as they should be.
Getting the right permanent life insurance policy takes a combined effort. First, you have to educate yourself and know what the different types of insurance policies have to offer. Second, you should discuss the insurance types with a professional insurance agent. You have to be careful when shopping for insurance, as most brokers are out to make as much money off of you as they can. Brokers have access to hundreds of insurance companies and although they may be able to find you the best deal, it doesn't necessarily mean it's going to happen. Always do your own research and educate yourself through the many pages available on the Internet. You can get a online quote for your permanent life insurance without having to talk to a broker at all. You get to make the decisions and nobody stands in your way.