Advantages of Permanent Life Insurance
The basic difference between term and permanent life insurance is this: A term policy is life coverage only. In permanent life insurance policy, as long as one continues to pay the premiums, the policy does not expire for a lifetime. As the term applies, permanent life insurance provides coverage for the whole life. Permanent life insurance policies build up a cash value (usually beginning after the first year). With permanent life, you pay a fixed premium for life instead of the increasing premiums found on renewable term life insurance policies. In addition, permanent life insurance has a cash value feature that is guaranteed. In term and permanent, the full premium must be paid to keep the insurance.
Some of the advantages of a permanent life insurance policy include:
- Interest accumulated through the investment portion of the policy is tax-free until withdrawn.
- Irrespective of your age or health, the amount of life insurance premiums remain fixed.
- Permanent Life Insurance can also be used to create tax-deferred savings for retirement.
- Helps to manage ongoing, future and uncertain family expenses.
- Helps fulfill the financial obligations of the family/dependant in case of death of the person insured.
- Allows borrowing against the cash value.
- The policy holder can cancel or surrender the permanent life insurance policy at any time and receive the cash value.
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Find out more about the differences between term insurance and whole life insurance and the advantages below: