Permanent Life Insurance: Is It Right for Me?

Shawn Plummer

CEO, The Annuity Expert

When you plan for the future, few things are as important as having a reliable safety net in place to protect your loved ones if something were to happen to you. That’s why so many people choose permanent life insurance policies: they provide the peace of mind that comes with knowing that coverage will stay in force no matter what happens down the road. Permanent life insurance can provide essential benefits like death benefit payouts and lifelong protection — but it’s also more complex than other types of coverage like term-life policies. Keep reading to learn how permanent life policies work and if they suit your needs!

What is Permanent Life Insurance?

Permanent life insurance is the perfect combination of life coverage and investment opportunities. A permanent life policy will insure you throughout your lifetime, meaning it does not have an expiration date. Additionally, permanent life insurance offers more flexibility when paying premiums or gaining access to cash value – both can accumulate tax-deferred over time! Compared with term life insurance which only covers a specific length of time, this policy provides additional security and peace of mind.

Generally, permanent life insurance policies are more expensive than term life insurance policies but offer a death benefit guaranteed to remain in force as long as premiums are paid.

Permanent life insurance coverage also provides living benefits, such as access to a portion of the policy’s accumulated cash value through loans or withdrawals.

Permanent life insurance is an excellent choice for those who want a lifelong death benefit, flexibility to use their policy in retirement, and the potential to build tax-deferred cash value over time. In addition, it can cover final expenses, supplement retirement income, pay off debt, or fund other long-term goals.

What Is Permanent Life Insurance

At What Age Should You Consider Getting Permanent Life Insurance?

The best age to get permanent life insurance is usually between 30 and 50. This is because you’re more likely to be healthy during this period, and premiums are typically lower than for those over 50.

However, the right time for you may vary depending on your financial situation and goals. Consider factors like your current health status, future goals, and the coverage you need. Life insurance at a younger age can be beneficial if you have dependents or other financial obligations that may continue after you’ve passed away.

If you’re over 50, it is still possible to get permanent life insurance. However, premiums may be more expensive at that age as you may be considered at higher risk. But, if you have a medical condition that has been stable for several years, some insurers may offer more favorable rates.

Ultimately, the best time to buy permanent life insurance is when it makes sense for your situation and goals. Then, consult an experienced financial adviser to help you make the right decision.

What Is The Best Age To Get Permanent Life Insurance

What Are The Different Types of Permanent Life Insurance?

Four popular types of permanent, cash-value life insurance policies are available:

These policies can offer you long-term financial security and tax benefits that will last a lifetime.

What is Whole Life Insurance?

Whole life insurance is a type of permanent life insurance that provides coverage for the policyholder’s entire life. It combines an investment component with the policy’s death benefit, providing a tax-advantaged savings element and guaranteeing a death benefit payout.

Unlike term life insurance, which only pays out upon the insured’s death and has no other features, whole life insurance policies can accumulate a cash value that the policyholder can use or access while still alive. This cash value accumulation is the primary difference between whole and term life insurance. Whole-life policies come with higher premiums than term, but they often provide more flexibility regarding how the benefits are used.

Whole life insurance can provide financial stability to the policyholder and their family by providing a guaranteed death benefit regardless of market performance and potential tax benefits. The value of whole life insurance policies can also increase if investments within the policy perform well.

What Is Whole Life Insurance

What is Universal Life Insurance?

Universal Life Insurance (UL) is a type of permanent life insurance that offers flexible premiums, death benefit options, and cash value accumulation. It allows policyholders to adjust their coverage as their needs change over time. UL also allows policyholders to adjust the premium payments they make and the amount of death benefit they receive while still receiving the same tax-advantaged savings of a permanent life insurance policy.

UL is different from other types of life insurance because it allows for more flexibility in premium payments and death benefit options. In addition, the cash value accumulation feature also adds a layer of protection to policyholders as they can access the money that accumulates throughout the policy’s life in the event of an emergency.

Universal Life Insurance is an excellent option for individuals who want flexibility in their insurance policies and benefit from its cash value accumulation feature. UL allows policyholders to make adjustments over time to ensure they receive the best coverage that meets their needs.

What Is Universal Life Insurance

What is Variable Universal Life Insurance?

Variable Universal Life Insurance (VUL) is an excellent option for permanent life insurance, combining the best of both whole life and term insurance. In addition, policyholders can personalize their coverage by selecting varying death benefits and investment options while guaranteeing a minimum benefit upon passing away.

With VUL, the policyholder can adjust their premium payments, death benefit amount, and investment portfolio. This flexibility allows the policyholder to customize their coverage to meet their financial needs. The cash value of a VUL policy can also be used for things like supplementing retirement income or covering significant expenses, such as paying off debt. As with any life insurance policy, it is essential to understand the features before signing on and ensure they meet your needs in the long run.

VUL is an excellent option for people who want permanent coverage but also need financial flexibility and the ability to adjust their policy. It can also help supplement retirement income or provide a cash value account for significant expenses.

What Is Variable Universal Life Insurance

What is Indexed Universal Life Insurance?

Indexed Variable Universal Life Insurance (IVUL) is a permanent life insurance policy that combines the benefits of universal and variable life insurance. It offers an array of features designed to help policyholders protect their loved ones, accumulates tax-deferred cash value, and provide access to additional funds during retirement or other major life events.

The primary difference between IVUL and other life insurance forms is that an IVUL policy’s cash value can be linked to market performance. Your policy’s cash value can increase significantly if the stock markets perform well. On the flip side, if the markets do not fare as well, your policy’s cash value will be unaffected.

IVUL policies also offer flexible premium payments, death benefits, and the ability to add riders that provide additional coverage for your loved ones in the event of your passing.

IVUL is an excellent option for those who want the flexibility of variable life insurance with the potential to benefit from higher returns if the stock market performs well. However, it is essential to note that there is no guarantee of performance and that all investments come with an inherent level of risk.

What Is Indexed Universal Life Insurance

Can You Cash Out Permanent Life Insurance?

Absolutely. A permanent life insurance policy offers a great deal of flexibility in accessing the cash value associated with it, from surrendering or cashing out the policy to taking out a loan (which doesn’t have to be repaid) and even using the cash value component as payment for premiums. However, surrendering before retirement may incur costly charges while losing your life insurance protection. With this in mind, consider other ways of tapping into your policy’s wealth first!

What Are The Benefits of Permanent Life Insurance?

Although it’s usually pricier, permanent life insurance never expires and provides a way to save or invest some of your premiums. Additionally, the interest or dividends from your policy could be enough to cover the cost of your permanent life insurance premiums!

If you’re thinking about life insurance, you may want to consider a permanent type of policy if:

  • Permanent coverage: Are you looking for a life insurance policy that will provide lifelong coverage? If so, permanent insurance could be just the thing to meet your needs. It provides protection and peace of mind without worrying about its expiration date!
  • A savings or investment vehicle: A permanent life insurance policy is an excellent way to save money. With a whole-life plan, you can get cash value from your policy. With a variable policy, you can choose where your money is invested. You can also withdraw money from your policy if you need it.
  • Cheaper coverage when you’re young: Investing in permanent life insurance while you’re still young is a wise decision! Compared to buying term coverage when you’re 55, the premium payments are much lower and more cost-effective. Plus, there’s even a bonus- cash value components that come with your policy! So don’t wait another day; secure your future today by investing in permanent life insurance while rates remain budget-friendly. With this small change now, you’ll be able to reap big rewards later on down the road!

What Are the Disadvantages of Permanent Life Insurance?

While there are potential benefits to investing in this type of policy, it’s also important to be aware of the drawbacks:

  • Cost: The main downside of having a permanent life insurance policy is that it typically costs much more than term life policies. Many people do not need coverage past a specific time frame, so buying an option that can be converted in the future if additional protection is needed often makes more sense financially.
  • Possible policy lapse: If you miss a payment or can’t afford payments, your policy could be canceled. If it’s canceled, you may need to buy a new policy. That would mean starting over and paying more for the new policy.
  • Not Convertable: While a permanent life insurance policy can be beneficial in terms of the lasting coverage it provides, it also has drawbacks. If you discover that you don’t need such long-term protection anymore, all the money already paid into premiums will have been wasted, and your investment will be gone forever.

Overall, permanent life insurance can be an excellent investment and provide many benefits. While it is essential to consider the drawbacks, understanding these potential risks and weighing them against the rewards of investing in permanent life insurance can help you make an informed decision that works best for your needs.

Is it Better to Have Term Life or Permanent Life Insurance?

Term life insurance is typically much more cost-effective than permanent life insurance.

Yet, if you desire lifelong coverage, the pricier option of permanent life may be best for your needs. This plan will endure as long as premiums keep being paid on time. As long as premiums are paid, your beneficiaries will receive a death benefit. It is important to note that the cost of the policy typically increases over time due to inflation and other factors.

Permanent life insurance can also provide you with cash value. A portion of each premium payment is set aside in a cash account within the policy, which can grow over time. This cash account can supplement retirement income, pay off debt, or cover unexpected healthcare expenses.

Ultimately, the choice between term and permanent life insurance depends on your individual needs.

How Much Does Permanent Life Insurance Cost?

When calculating the cost of life insurance, several variables factor in: age, gender, health and wellness status, tobacco use, and amount of coverage. Permanent life insurance is more expensive than the term as it offers a range of added benefits not available with the latter – plus, you can employ whole or universal policies for different protection needs. Furthermore, any policy option chosen will be cheaper when taken out at a younger age.

Permanent Life Insurance Quotes

Compare permanent insurance quotes to find the cheapest rates. Determine whether universal or whole life insurance is worth the cost compared to the more affordable term life insurance.

Next Steps…

If you’re looking for a life insurance policy offering lifelong coverage, then permanent life insurance may be the best option. This policy has many benefits, including building cash value and protecting your family during death. Contact us today for a free quote and to learn more about how permanent life insurance can help you and your family.

What Is Permanent Life Insurance? How Does It Work? Is It Worth It?

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Frequently Asked Questions

Why is permanent life insurance bad?

Permanent life insurance can have higher premiums, lower liquidity, and may not provide sufficient returns.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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