Who Should Buy Permanent Life Insurance?
Permanent life insurance is used to provide for a person's family after they are deceased, typically in an amount that equals a majority of the insured person's financial value. It does not have the same time restrictions as term life insurance and may offer features that term life does not, such as borrowing against the value of the policy.
Other People Are Reading
-
What Is Permanent Life Insurance?
-
Permanent life insurance is a form of life insurance that does not expire as long as the premiums are kept up to date. Permanent life insurance is also known as whole life or universal life insurance. The simplest form of permanent life insurance will pay for the deceased person's funeral expenses, and more complex types not only allow the insured to pass on inheritances to survivors, it can be used as a financial tool while the insured person is still living.
Whole Life for Inheritances
-
Permanent life insurance policies offer the best return when they are taken out early in life because of the fact that rates increase as you age. A permanent life insurance policy that is taken out when you are in your twenties will accumulate interest over time and can be used specifically to create a nest egg for your descendants when you pass away.
-
Permanent Insurance for Life Goals
-
A whole life insurance policy can be established to pay off a property mortgage or to establish the funds for relocation for surviving family members, such as the family moving back to ancestral regions. In a household where there is only one wage-earning parent, a permanent life insurance policy makes it possible for the surviving, nonworking spouse to live a comfortable life after the person with an income passes away.
Whole Life Insurance as an Investment
-
Many whole life insurance policies allow the premiums to accumulate into an account similar to a savings account. In some cases, such as a universal life policy, the insured person may participate in how the premiums are invested. Other policies allow you to take out a personal loan against the accrued value of the policy without paying interest rates or putting up collateral.
When Term Life Is More Appropriate
-
Permanent life insurance may not be the best type of coverage for all purposes. Term life insurance is a form of coverage that expires after a predetermined length of time. The advantage of term life policies is that the premiums are lower, and the major disadvantage is that the money invested into the policy may be lost if the term expires.
Balance Whole and Term Life Coverages
-
To get the best coverage for yourself and your family, a mixture of permanent and term life policies works well. Take out a single permanent life insurance policy, and supplement that coverage with term life policies to cover any additional needs that develop. The home can be insured under a decreasing value term life policy that has lower premiums and a lower payout value as time moves forward.
-
References
- Photo Credit Happy family image by jura from Fotolia.com
