If you have been considering buying permanent life insurance, then this is something you should consider. This kind of insurance policy is designed to provide you with coverage for your entire life. Generally speaking, permanent life insurance combines a death benefit that helps allow policies to build a cash value and later on withdraw cash to meet needs like paying for a child’s college education or covering medical expenses.
Types of Permanent Life Insurance
Talking about the types of permanent life insurance, there are two i.e. whole and universal life insurance policies. Coming to the first one, the whole life insurance offers coverage for the full lifetime of the insured and its savings can grow at a guaranteed rate.
While on the other hand, universal life insurance, in addition to a death benefit, also offers a savings element and most importantly, different types of premium structures and earns based on market performance.
Advantages of Choosing Universal Life Insurance Policy
Following are the advantages of choosing a universal life insurance policy.
1. Extra Income: There is no denying the fact that whole life policy can be exchanged without tax penalties for an annuity that can provide you with additional income for life. Hence, it is important for you to consult a qualified financial advisor or tax professional that can understand your scenario.
2. Cash Value Growth: It really does n’t matter how stock markets perform, your cash value will increase at a constant speed and fixed rate. However, with the passage of time, your policy builds cash value which is not subject to the declination of the stock market.
3. Additional Cash Source: There are times when you need additional financial resources that can help in funding certain expenses. Your whole life policy can be a source of funds that would assist you to meet these needs and other financial obligations. And the bottom line is that a permanent life policy would allow you to borrow from the cash value which is available.
4. Dividends: It has been observed that there are some whole life policies that pay out annual dividends. This cash can be used to purchase additional life insurance that would ultimately help to increase both the aspect i.e.cash value of your life insurance policy and total death benefit. However, you should keep in mind that dividends are not guaranteed at all.
5. Insurance Protection: Last but the not the least, the cash value that your whole life policy accumulates isn’t subject to stock market volatility unlike other types of life insurance policies.