What is Permanent Life Insurance?

Posted September 27th, 2019 by Amy Danise

Permanent life insurance summary

What is permanent life insurance?

Permanent life insurance refers to the types of life insurance that provide lifelong coverage. It’s the opposite of term life insurance, which has a specific end date for expiration.

Who should consider permanent life insurance?

Permanent life insurance is good for people who want to make sure there’s life insurance money to pay for a funeral, provide an inheritance, or fund other family needs, no matter when they pass away.

It’s also good for people whose heirs will have to pay estate or inheritance taxes on large estates. The permanent life insurance can provide money to pay the taxes.

Is permanent life insurance the same as whole life insurance?

Whole life insurance is only one form of permanent life insurance. While many people use the terms “permanent life insurance” and “whole life insurance” to mean the same thing, permanent life insurance is broader. Permanent life insurance could also refer to universal life insurance, for example.

What are the advantages of permanent life insurance?

  • Doesn’t expire: Once you buy permanent life insurance, you generally don’t have to worry about the policy expiring (as long as you pay the premiums). With term life, such as 20-year term life, you might find you still need insurance after 20 years and have to buy another policy.
  • Cash value: Some permanent life insurance policies build up cash value, such as whole life insurance. You can withdraw money from your cash value or take a loan against it, for any purpose. For example, you could pay for college tuition or have extra retirement funds if your policy has enough cash value.

Is permanent life insurance popular?

Among people who buy life insurance, the most money is spent on permanent life insurance policies, including whole, universal and variable universal policies.

Permanent life insurance facts

How much does $500,000 of life insurance cost?

A male age 40 could pay around $7,400 a year for a $500,000 whole life insurance policy. A female age 40 could pay around $6,500 for the same policy, based on EverQuote research.

Term life insurance offers a much cheaper alternative: About $650 a year for a 40-year-old male for a 30-year term life policy of $500,000, and $550 for a female. If 30 years of coverage (or less) can suffice, consider term life insurance.

How can I save money on permanent life insurance?

You can save money on life insurance by buying it at a young age. Life insurance quotes go up at each age, even if you’re in good health.

Among permanent life insurance policies, universal life tends to be the most affordable. However, universal life insurance doesn’t always offer all the guarantees of whole life insurance, such as guaranteed death benefit amount.

You’ll also save money by shopping around and comparing quotes from multiple companies.

Should I buy permanent or term life insurance?

The decision to go with permanent or term life insurance often revolves around what you need life insurance to cover. If your family needs life insurance protection to pay a mortgage or other bills, term life may be the best choice because you can cover the years of the debt without paying for longer insurance you don’t need.

If you know your family will need life insurance money no matter when you pass away, even if it’s many years from now, permanent life insurance can fit the bill.

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