Know more about Permanent Life Insurance
Overview
Once you have decided to opt for the life insurance, you have to be careful about choosing the right kind. Decision made in hurry can not only leave an unsatisfied results but would also disturb your expenditures. Hence, it is advised to either do a good research about the numerous options available for life insurance or learn the facts from a professional (insurance agent or company's broker). Basically, there are two main types of life insurance, term life and permanent life insurance. Term life insurance offers you the death benefits for only a specified period of time. Permanent life insurance offers the protection for your entire life (as long as you keep the policy active by paying premiums). Both the policies have their advantages and disadvantages. Depending upon your need and benefits you want, you can choose the relevant one. Permanent policies are further categorized into sub-types such as whole life, universal life, variable life and universal variable life. Let us learn more about these types of permanent life insurance policies.
Whole Life Insurance
Whole life insurance is a type of permanent life insurance where you get the coverage for your entire life. It is surely different from the term life insurance as per the benefits of the coverage. However, you need to make the payments (premium) which is usually more than needed to pay for the current costs of insurance coverage and expenses. The excess payment is credited to the cash value account. This account allows the insurance company to charge guaranteed premium and to provide a death benefit and cash value throughout the life of the policy.
As you pay the premiums, the cash value account grows. The cash value can grow beyond its guaranteed amount through the payment of dividends (profits earned by a mutual insurer). This cash value can either be used as collateral to borrow from the insurance company or can be directly accessed through a partial or complete surrender of the policy. However, if you opt for partial surrender, it will reduce the policy's death benefit and with a complete surrender, your coverage will be completely terminated. Once you mature your policy, you will receive the entire accumulated cash value (equal at maturity to the death benefit).
Universal Life Insurance
Universal life insurance is a type of permanent life insurance where you get a death benefit as well as cash value account. Unlike whole life insurance, universal life insurance gives you the flexibility of making premium payments. Universal life insurance will offer you a broad premium guideline from which you can choose how much and when can you make the payments. Remember, as you decrease or increase your premium, your cash value component would be affected accordingly. You can also change the policy's death benefit directly (within limits set by the company) in period of financial crisis. However, if you want to increase the premium levels, you may be asked for a medical exam. One of the prominent features of universal life insurance is that it reveals all aspects of the policy's cost structure including cost of insurance, and expenses.
Variable Life insurance
Variable life insurance is a type of permanent life insurance with a cash value account. You have the authority to invest the cash value account as per your choice. Variable life insurance need a fixed annual premium to keep it active and can also provide a minimum guaranteed death benefit.
Variable Universal Life Insurance
As the name suggests, variable universal life insurance is a hybrid of variable and universal life insurance. With this insurance plan you can get the flexibility as well as authorization of making your on policy decisions.
Some plan may attract a group of people while the others may deny to accept the plan. Let it be any plan that you choose, make sure that you are aware of benefits and disadvantages of every plan.
Share this Article with your Friends
