- I told you there are many different types of life insurance products out there right? In the beginning we discussed various temporary life insurance products.
- Now we will talk about permanent life insurance. There are three main types of permanent life insurance that we’re going to cover here on a high level.
- First, let’s look at whole life insurance. Whole life insurance is exactly how it reads. Life insurance for your whole life essentially.
- Whole life insurance policies offer fixed premiums and also have an investment component referred to as the policy’s cash value.
- Another factor in the whole life insurance product is the ability to take a loan out against the cash value you have built up.
- One of the biggest complaints about whole life insurance is that only the death benefit is what your beneficiaries receive, not the cash value.
- Make sure that you understand whether or not the permanent life policy you sign up for will distribute your cash value to your designated beneficiaries upon your death.
- The next type of permanent life insurance to review is called universal or adjustable life insurance.
- A little more flexible than whole life insurance.
- With a universal policy you can adjust the policy amount pending a medical examination which would also impact your premiums.
- Typically the investment returns on these cash value policies are very low.
- Review where your money is being allocated to and analyze the history of the investments within cash value policies.
- The final type of permanent life insurance I’m going to introduce is variable life insurance (VL).
- In a VL, you can invest your cash value in stocks, bonds, money market funds and other assets.
- Growth of your investments in a VL product grows tax-deferred.
- With a VL policy you will want to pay close attention to the fees and premium costs.
- Typically you’re going to pay higher premiums and incur higher fees.
- Permanent life insurance products can offer estate planning benefits like protecting your assets when you die.
- In 2019, this amount is $11.4 million for the individual and is usually adjusted for inflation.
- Make sure you fully understand the concept of this benefit so you can be sure you provide the best chance of survival for your family or whomever survives you.
Breaking Down Permanent Life Insurance
