the Advantages of Having Permanent Life Insurance
Permanent life insurance is a set of policies which cover the insured’s entire lifespan, under the condition that premiums get paid on a continual basis. Therefore, whether the insured passes away immediately after getting the life insurance, or passes away many years later, his/her beneficiaries would still get a death benefit. Additionally, most permanent life insurance policies include a cash value component which is more or less like an investment account that allows borrowing or withdrawing from the policy’s cash value as soon as it becomes a large sum. Permanent life insurance policies for instance universal and whole life insurance provide lifelong coverage to policyholders and include cash value component, which grows steadily over time and can be used by the policyholder to acquire loans from the insurer or pay premiums. Even though term insurance is quite popular among most people, there are still plenty of benefits to be reaped from permanent life insurance. Highlighted below are some potential benefits of a permanent life insurance policy.
As mentioned earlier, permanent life insurance policies include a cash value component. It is true that all kinds of life insurance offer a death benefit to the insured’s beneficiaries, which are often tax-free. Permanent life insurance policies however can earn cash value as an addition to the protection provided by the death benefit. Besides providing protection, this cash value is beneficial since it can be borrowed as a loan from the insurer. Through this component, the permanent life insurance policy is given a liquidity characteristic. However, it is important to note that loans can significantly reduce both the death benefit and cash value based on the amount borrowed.
It is quite obvious that policyholders of permanent life insurance policies receive lifelong coverage. So long as the agreed premiums are paid, permanent life insurance policies only terminate upon the death of the policyholder or if they choose to surrender the policy. Some permanent life insurance policies however reach maturity at a specific age, usually 101 21 years. If the policyholder happens to still be alive at the stipulated maturity age, payment of premiums seizes immediately, but the death benefit is still payable to the beneficiaries of the insured upon his/her death. However, in some policies, when the insured reaches the stipulated maturity age, they simply choose to pay out the death benefit or disburse the cash value.
A key benefit of whole life insurance policies is that the premiums required to be paid never change. The premium declared upon issuing of the policy stays the same regardless of the policyholder’s age.