Advantages of a Permanent Life Insurance Policy
The first decision you will have to make when choosing a permanent life insurance policy is the type of policy you will need to suit your purposes. Permanent life insurance is available in several forms, and provides you with many advantages that are not available in term life insurance.
The Policy Does Not Expire
Term life insurance policies expire after the period specified in the policy. While some term life policies can be renewed or converted, the premiums will be much higher than if you had simply purchased a permanent life insurance policy to begin with.
Permanent Life Insurance is a Financial Vehicle
Depending on what type of permanent life insurance you get, the policy offers you a variety of financial tools that can help you in the future without eliminating the benefits you want to leave for your loved ones later. For example, you can borrow against the accrued cash value on most permanent life insurance policies, and some types of policy will even allow you to participate in deciding where and how your premiums will be invested, which can yield a higher cash value. The cash value in your policy can even be used to pay a couple of premiums if you get into a financial bind and can't make your payments.
Permanent Insurance is Cheaper in the Long Run
At first it may appear that term life insurance is cheaper than permanent insurance, but as soon as the term policy is renewed or converted your premiums will suddenly go up dramatically. Paying level premiums throughout the duration of the policy can actually work out to be the best value, especially you purchase the policy early in life.
Permanent Insurance Has More Options
There are several types of permanent life insurance. Whole life, universal life and variable universal life each behave differently, and each type should be considered before you purchase a policy. Universal life behaves similarly to whole life, but allows you to borrow against the cash value as it accrues. Variable life policies allow the policyholder to adjust how the accrued cash is invested, and some types include dividend payouts of the interest earned without affecting the value of the policy.