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PERMANENT LIFE INSURANCE – TYPES
Permanent life insurance, a policy which provides coverage for the lifetime of the insured as opposed to term life insurance which provides coverage for a fixed period. This means the policy does not end so long as the premiums are paid. Also it provides savings elements with its insurance quotes which build your cash value. There are 4 kinds of permanent life insurance:
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Permanent life insurance, a policy which provides coverage for the lifetime of the insured as opposed to term life insurance which provides coverage for a fixed period. This means the policy does not end so long as the premiums are paid. Also it provides savings elements with its insurance quotes which build your cash value. There are 4 kinds of permanent life insurance:
- Whole Life Insurance –
This is also known as Ordinary Life Insurance. It is most common of the other types. It is valid throughout a person’s lifetime which is the absolute opposite of term life insurance. It offers death benefits with cash value (savings vehicle). Some companies might pay dividends which is return of the excess premiums.
- Universal Life Insurance –
Also known as Adjustable Life Insurance, this type provides more flexibility when compared to whole life insurance. It offers cash value that gradually earns a guaranteed interest rate. The savings vehicle belongs to the owner of the policy and withdrawals or borrowings can be made against it since it is provided as part of the policy. The insured has an option of adjusting the death benefits and premium payments as fits the situation within limits of course. For instance, if there are sufficient funds in your cash value to cover costs then there is an option provided to reduce the premium payments. This is useful if at all your financial situation changes suddenly. Although if you reduce or stop your premium and your savings gets used, the policy can lapse and coverage could end.
- Variable Life –
This is a type of policy which along with death benefit provides many investment options that are professionally managed. The cash saved as cash value can be used as stock investments, mutual funds and bonds. Hence value of the policy increases quickly but it can mean more risk. If the investments you make do not work well, the cash value and the death benefit can reduce or you may be asked to pay a higher premium to let the validity of the policy remain intact. But, some policies guarantee that there will not be a decrease in death benefit below a fixed minimum level. With universal and whole life insurance you can borrow or withdraw against your cash value at any given time. Although, it is essential to keep in mind that withdrawals and loans can decrease cash value and the death benefit on your policy.
- Variable-Universal Life –
These policies combine features of universal life and variable life policies. The risks of investment and rewards that are present in variable life insurance are combined with the provision to make adjustments to your premium and death benefits as is provided by universal life insurance.
In contrast to term life insurance which does not provide cash value and which has no scope of collecting any benefits before death although it does have much lower insurance quotes, permanent life insurance seems more appealing in terms of potential with provision for investments and rewards.
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