Permanent Life Insurance

There are two types of life insurance coverage, term and permanent life insurance.  Term covers a specified period of time.  Permanent life insurance policies are designed to cover your entire life, whether you live to age 70 or 100.  Two kinds of permanent life insurance policies we will discuss below include: universal life and whole life.

Universal Life

whole life insurance - erie co

Your life changes, so you need options that can help you keep up. A universal life insurance policy offers permanent life insurance with flexible premiums. This allows you to adjust the amount you pay each year–even month to month–as long as you have enough account value. You may also choose a policy with a guaranteed death benefit, which means your family is guaranteed to receive a lump sum of money in the event of your passing.

Characteristics of Universal Life

Death Benefit

Universal life insurance provides permanent coverage so that in the event of your passing, your family is protected. Some universal life policies offer an option to guarantee the death benefit as long as specified premiums are paid.

Flexible Premiums

As long as there is enough value in your policy to cover the cost of insurance and administrative charges, you can decide how much premium to pay within certain limits. This means you have the option to pay extra sometimes, and less when you might need to.

Build Account Value

Depending on the premium you choose to pay, your account may build value. And if your account builds enough value, you can borrow from your policy for any reason you choose.1 – see notes below

Whole Life

Whole life insurance offers a combination of guaranteed death benefit protection, guaranteed cash value accumulation, and guaranteed level premiums over a lifetime. And, generally available tax advantages that provide an effective and strong financial resource, such as:

  • Income tax-free death benefit to a beneficiary
  • Tax deferred cash value growth
  • Tax favored policy loans and withdrawals from cash value2

Characteristics of Whole Life

Guaranteed Premiums

Premiums are guaranteed not to increase as you grow older or if your health declines. The premium you pay today will be the same premium you pay in later years.

Guaranteed Lifetime Coverage3

When you purchase a whole life policy, you are helping to ensure insurance protection for your entire life. As long as premiums are paid and policy loans do not exceed the total cash value, your coverage cannot be terminated, even if you become uninsurable later in life.

Guaranteed Tax-Deferred Cash Value Accumulation

Your policy is designed to gradually build cash value each year on a tax deferred basis. During your lifetime, the cash value can be accessed as a policy loan to help fund a major purchase, supplement your retirement income, or simply in times of emergency or a special need. Accessing your cash value will, however, reduce your death benefit.

Policy Dividends4

Your policy may earn a dividend that can be used in the following ways:

  • Paid-Up Additions

    This option allows you to increase insurance coverage by purchasing additional “paid-up” insurance.

  • Out of Pocket Premium Reduction

    This option allows you to use any dividend to reduce your out of pocket premium.

  • Dividend Accumulation

    This option allows you to leave any dividend you earn with the insurance company to earn interest.

  • Cash

    This option allows you to receive a check in the amount of any declared dividend.

If you would like to know more about Permanent Life insurance and if it makes sense in your insurance planning, give us a call today.

Footnotes: 1) Access to account values through borrowing and/or withdrawals will reduce the cash surrender value and may reduce the policy death benefit. Taking a policy loan could have adverse tax consequences if the policy terminates upon lapse or surrender or before the insured’s death. 2) Loans and withdrawals will reduce the death benefit if not repaid. Always consult an attorney or tax advisor regarding your specific legal or tax situation. 3) Subject to the terms of the policy, including payment of the required premiums, suicide exclusion, contestable provision and loan provision. 4) Dividends are not guaranteed and may be changed by the company at any time. 

This website is for informational purposes only and is not intended to be specific advice or recommendations.  For specific advice or recommendations you would need to meet directly with one of our advisors.