Unlike term life insurance, permanent life insurance is exactly as the name suggests, permanent for the life of the insured person. This means that regardless, you will be covered if you make your premium payments on time. Upon your death, the benefit will be paid out to the person that you choose to be your beneficiary.
How Permanent Life Insurance Works
Permanent life insurance doesn’t have a set timeframe for how long it lasts as it covers you for your entire lifetime. One of the biggest traits of this type of life insurance policy is that it comes with a focus on building its cash value. Think of it as a savings account, as you can withdraw the cash value of the policy before your death just in case you need access to cash in a time of emergency.
Keep in mind that there are stipulations to being able to withdraw the cash value such as having to wait for a certain amount of time before you’ll be allowed to do so. In this instance, it ensures that your policy has time to build up its value. Of course, you don’t have to withdraw the cash value and you can just use the policy for its death benefits.
The Benefits of Permanent Life Insurance
To help you decide whether permanent life insurance is really worth it or not, we outlined some of its strongest benefits for you below.
· Borrow from the cash value of your policy if needed.
Since the savings approach is built into this form of life insurance, you can rest assured that you can bail yourself out of hard times if there comes a need to do so. Your policy is design to grow its cash value, and this is an option other life insurance policies fail to bring to the table.
· The growth in the cash value of the policy is tax-deferred.
The only exception to this benefit is if your payout upon cancellation exceeds what you have paid in premiums. Making this a tax-friendly option to insuring your life is one of the biggest advantages to make it a winning solution for many.
· You don’t have to worry about the policy becoming non-existent.
Instead of providing you with a set term, permanent means permanent which ensures that you will always have your life insurance if you go this route. The only way that it becomes extinct is if you fail to pay your monthly premium.
Keep in mind that it could become more difficult to be covered by this type of policy, so if you find yourself having certain conditions you might be better off with something like simplified issue life insurance. However, this is one of the strongest options that the insurance industry has to offer.