Permanent Coverage Options

What Do You Want from Your Life Policy?

There are two types of life insurance available today: term and permanent. One is straightforward life insurance with a basic cash payout. The other works a little harder for you. The type you choose will depend on your financial situation and what you're looking for in an insurance policy.

Permanent Is for Life

One main difference between term and permanent life insurance is that permanent doesn’t expire. As long as premiums are being paid, it stays with you permanently.

Cash Value

The other big difference is that with permanent life insurance, your premiums are invested to produce returns. This gives your policy a cash value, which usually accumulates at a guaranteed minimum interest and is available to help fund retirement, emergencies and more.

Tax Deferral

The law currently allows your cash value to grow tax deferred. Because of this benefit, a permanent life insurance policy has become more than a protection tool for some people—it’s also a financial tool.

Is Permanent Insurance Right for You?

More About Permanent Life Insurance

There are also different types of permanent life insurance, all of which provide a cash value. The most basic way to break them down is into fixed and variable. With fixed, your cash value earns a fixed rate of return. With variable, you have more control over how your cash value is invested, and you return may vary.

Fixed

Whole Life
Also known as straight life, whole life is the simplest form of permanent life insurance. You’ll pay the same amount of premium for the rest of your life. (Start young and the less expensive the premiums will be.) Your cash value will accumulate based on a guaranteed rate. As long as your policy is current, you can borrow against the cash value at the current policy loan interest rate.

Universal Life
This type of insurance is broader than whole life in that it gives you more flexibility. You pay a set initial premium, but after that you decide when and how much you want to pay (subject to certain limits, of course). How does this work? The insurance company simply charges the insurance cost from your cash value account. You can even skip payments as long as you know your cash value is adequate enough to cover the insurance costs. You can also increase or decrease your death benefit amount without buying a new policy.

Variable

Variable Life*
With variable life, you pay a fixed premium amount, but you have the option of investing your premiums in one or more sub-accounts ranging from conservative to more risky. Your cash value is not guaranteed as it is with whole life. Instead, it will vary based on the performance of your investment choices. The good news is you have potential for higher levels of growth. The bad news is your cash value could decrease. Even so, your death benefit protection is not in jeopardy as long as you meet the conditions slated in your contract.

Variable Universal Life*
This option combines some features of variable and universal policies to create a more flexible life insurance product. As with universal life policies, you decide, after the initial premium, when and how much more you want to pay into your policy. You can adjust the death benefit, plus you have the wide range of investment options as with variable life. Again, your cash value will increase or decrease depending on the performance of your investment choices.