Permanent Life Insurance

While not as widely publicized on a day to day basis, permanent life insurance is not to be ignored. Most permanent policies offer guarantees, numerous policy features, and the ability to be tailored to fit the specific needs of each client. While slightly more detailed than term insurance, the benefits are undeniable.

Here is how it works…

The first step will be selecting what is called a death benefit. This is simply the verbiage used for the amount of coverage that is desired. The death benefit is the sum that will be paid to the designated beneficiaries when the policy holder passes away. This is particularly important when discussing permanent life insurance as the death benefit is often guaranteed to be left to beneficiaries. So when selecting a death benefit for a permanent life insurance policy, it is important to consider the desired use of the benefit to ensure all future goals are met. For example, what debts will likely need to be paid? What type of income will need to be replaced? Who and how many beneficiaries should be left a portion of the benefit?

The next step will be selecting the policy type. There are several available options for permanent life insurance, and again, it will be important to determine the intended use of the policy before selecting a policy type. For instance, there are simple universal or whole life policies that will offer nothing more than a death benefit after the client’s passing. Or there are more intricate policies like an indexed life insurance policy. An indexed policy will offer a death benefit, living benefits, as well as the ability to generate tax free cash value which can be accessed by the policy holder at any time. A good understanding of why the policy is being obtained can make selecting a policy type quite a bit easier.

The next and final step of this process is choosing additional policy features or living benefits. These benefits, in combination with the several policy types, are what allow permanent insurance policies to be customized to a client’s specific life situation and needs. To name a few, these features can include long term care or terminal illness coverage. These options will allow you to access portions of the death benefits should long term care be needed later in life or a terminal illness is discovered. These types of features ensure financial well being and help supplement retirement costs.  

Permanent Life Insurance Pros & Cons

The right life insurance plan is often not an easy decision to make. But understanding the products available will make the process much more accommodating. Let’s look at some advantages and disadvantages to permanent life insurance.

First, the advantages…

• Guaranteed Death Benefit  • Living Benefits  • Customization

The greatest benefit of purchasing a permanent life insurance policy is having the luxury of knowing that the death benefit will be paid to the elected beneficiaries. Knowing that the money being invested in a life insurance policy now will be left to the people or organization of your choosing. A guaranteed death benefit is the gift of security and financial well being. It’s the ability to pass a financial future to those cared about. The hope to leave a better life for those left behind.

Living benefits are a part of what makes permanent insurance unique and beneficial. The ability to add features to a life insurance policy that can be used for the policy holder while still alive defy the very nature of life insurance. It is truly a testament to how life insurance has evolved. These benefits offer the advantage of supplementing the cost of things like retirement, long term care, or even doctor’s bills. A great way to make later in life as convenient as possible.

The ability to customize an insurance policy specifically to an individual’s preference is really the point of life insurance. Permanent life insurance policies have grasped that concept completely. Offering several different policy types which in themselves cater to certain needs or wishes. And if that was not enough, most of those policy types offer additional features or options to further customize the policy. Whether looking for death benefit protection, wealth transfer, supplemental retirement income, or even tax free cash accumulation; permanent life insurance can accommodate.    

Now, the cons of permanent life insurance…

• More Complex  • Additional Cost  • Delayed Interest

By its very nature, permanent life insurance is more complex than its counterpart, term life insurance. The differing policy types and features can make obtaining permanent life insurance more complicated. Of course the assistance of a license professional will be required to navigate the ins and outs. However, the fact remains, permanent life insurance is simply more complex than term life insurance.

An additional deterrent for permanent life insurance is the perceived expense. Many often compare the cost of permanent life insurance to that of term life insurance. And in that regard, yes, permanent life insurance is not as cost effective. However, when comparing the benefits of permanent vs. term, the scales do tip steadily back to permanent life insurance. Finding the right balance of cost effectiveness and policy benefit is key to any life insurance purchase.

It is no secret that older age brings increased health issues. It is also no secret that older age and increased health issues bring additional life insurance cost and eligibility complications. This is the concern with permanent life insurance. It is often sought out much later in life as the benefits become much more applicable. Unfortunately by this time, many simply cannot afford a policy, are not eligible, or there is not enough time for the benefits to mature. The reality is, these types of policies are best purchased at a younger age to lock in a more competitive cost and truly get the most from permanent life insurance.

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