Permanent Life Insurance
Permanent Life Insurance Explained
Permanent life insurance offers many more variations than term life insurance. This makes being informed about your options even more important when considering a permanent life insurance policy.
Basically, as we stated before, Permanent life insurance policies will cover you for the rest of your life, regardless of age or health. As long as your premiums are paid, your policy will never expire.
Permanent life insurance policies also have a cash value to them. When you purchase a permanent life insurance policy, your premiums have an extra amount assigned to them. This extra amount is applied towards a savings account, which is invested by the insurance company and will continue to grow throughout the years of your policy. Very important to note – depending on your particular policy, the extra cash value portion of your policy may be forfeited at the time of your death or it may be added to your death benefit. Check with your insurance company regarding this detail.
Your “savings” account funds can be used at any time throughout your life (as long as you pay your premiums and have your policy in good standing). There are two ways to use your cash from your savings account.
First, you can ask for a loan from your insurance company against your cash value. You will have to pay interest on the loan, usually lower than standard rates. You can either pay back the loan or not. Paying off the loan will return the death benefit and savings to their original standing. If you do not pay off the loan, the death benefit will be reduced to cover the loan and interest. Be sure to check with your insurance company how this works as it varies among different companies and customers.
Your second option for accessing your savings cash is to request termination of your policy. Fully surrendering your policy means the savings and death benefit earned will be paid to you and the policy will no longer be valid. Partially surrendering your policy means that a portion of your savings and death benefit earned will be paid to you. Check with your insurance company to learn how this will affect your premiums and if they even offer partially surrendering your policy. Remember, an insurance policy is a contract. If it’s not in there, its not part of the contract.
As we stated before, there are variations to Permanent life insurance policies. Before making your decision, be sure to understand the pros and cons of each.
Permanent life insurance offers many more variations than term life insurance. This makes being informed about your options even more important when considering a permanent life insurance policy.
Basically, as we stated before, Permanent life insurance policies will cover you for the rest of your life, regardless of age or health. As long as your premiums are paid, your policy will never expire.
Permanent life insurance policies also have a cash value to them. When you purchase a permanent life insurance policy, your premiums have an extra amount assigned to them. This extra amount is applied towards a savings account, which is invested by the insurance company and will continue to grow throughout the years of your policy. Very important to note – depending on your particular policy, the extra cash value portion of your policy may be forfeited at the time of your death or it may be added to your death benefit. Check with your insurance company regarding this detail.
Your “savings” account funds can be used at any time throughout your life (as long as you pay your premiums and have your policy in good standing). There are two ways to use your cash from your savings account.
First, you can ask for a loan from your insurance company against your cash value. You will have to pay interest on the loan, usually lower than standard rates. You can either pay back the loan or not. Paying off the loan will return the death benefit and savings to their original standing. If you do not pay off the loan, the death benefit will be reduced to cover the loan and interest. Be sure to check with your insurance company how this works as it varies among different companies and customers.
Your second option for accessing your savings cash is to request termination of your policy. Fully surrendering your policy means the savings and death benefit earned will be paid to you and the policy will no longer be valid. Partially surrendering your policy means that a portion of your savings and death benefit earned will be paid to you. Check with your insurance company to learn how this will affect your premiums and if they even offer partially surrendering your policy. Remember, an insurance policy is a contract. If it’s not in there, its not part of the contract.
As we stated before, there are variations to Permanent life insurance policies. Before making your decision, be sure to understand the pros and cons of each.