We hear from people regularly who are confused about permanent life insurance and simply want to know if permanent coverage is right for them. If you’re currently in the process of shopping for and comparing permanent life insurance quotes, it’s important to understand your options. In order to help you make an informed decision, let’s clear the air and explain permanent life insurance once and for all:
The Two Types of Permanent Life Insurance
There are two subcategories of permanent life insurance: Whole and Universal Life (UL).
Whole Life Coverage
Whole life insurance provides life-long death benefit coverage, and in most cases, at a level premium. Whole life premiums are generally much higher than term life coverage. Because term premiums rise with age, the cumulative cost of a level premium whole life policy is often equivalent to that of term coverage over one’s lifetime. Whole life policies offer a cash value reserve which the policy holder can draw upon during their lifetime through tax-deferred policy loans. If there are unpaid policy loans at the time of the insured’s death, the insurer subtracts the outstanding loan amount from the death benefit.
Advantages of Whole Life Insurance
Whole life insurance policies include: guaranteed cash values, guaranteed death benefits, fixed premiums, and mortality and final expense charges that do not reduce cash value.
Universal Life Coverage (UL)
Universal life insurance also provides lifetime coverage and cash value. Premiums and interest rates specified by the insurance company increase the cash value of a UL policy. The cost of insurance and other specified charges can however reduce the cash value of UL policies.
Advantages of Universal Life Insurance
Universal life policies combine life insurance coverage with potential for higher cash value earnings and premium flexibility. That’s right, you can actually stop making premium payments if the cash value of your UL policy can cover the cost of insurance.
Both whole life insurance and universal life are great investment and savings tools. Universal life offers flexible premiums and the opportunity to earn higher cash value. With this flexibility comes a higher risk/reward variable. Whole life on the other hand is generally more expensive because it offers the stability of fixed premiums and guaranteed cash value.
A licensed life insurance agent can help you compare permanent life insurance quotes and determine which product is best suited to your needs. If for example you have a large gap in your current retirement plan, selecting a more aggressive UL policy might be a good option to begin closing that gap. Ready to talk to an agent? Request permanent life insurance quotes today and discuss your options with your personal IntelliQuote agent!
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