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Understanding Permanent Insurance Policy & its Benefits

When it comes to choosing life insurance, most people tend to face problems while selecting between term insurance and permanent insurance policy. However, among both, permanent is quite preferred one due its benefits. Coming to its meaning, permanent insurance is specifically designed to provide financial protection to your family after your death. Unlike term insurance, a permanent insurance policy will be active for as long as you pay your premiums. The reason behind this is that these policies are structured and priced for you to keep over a long period of time. However, if you don’t want life insurance coverage for long-term, then you shouldn’t opt for this type of insurance.

Types of Permanent Insurance Policy

Talking about the types of permanent insurance policy, there are two i.e. Whole life and universal life. coming to the whole life insurance policies, they have a fixed premium as like the term life. However, it collects cash value over time. While on the other hand, universal life insurance also accumulates cash value over time but it provides you with more flexible premiums. Furthermore, it allows you to adjust what amount you wish to pay using some of the accrued cash value. Depending on your circumstances, you can also adjust the death benefit. As far as the best one is concerned, universal life insurance is much more flexible than whole life.

Benefits of Permanent Insurance Policy

It offers three major benefits that include:

1. Value of Cash: Permanent policies helps to generate cash value that ensues over the policy’s life. Policyholders may borrow against the policy, or they can even cancel it for all of the cash value while alive, and receive a good amount of tax treatment.

Permanent Insurance Policy
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2. Lifetime Coverage: Permanent insurance policy provides a permanent coverage at a good premium amount throughout the entire policy.

3. Retirement Planning: It is highly appropriate for those who are looking for retirement planning because the person cannot outlive the policy.

Things you should consider if you are adopting permanent insurance policy

You should go for a permanent insurance policy, if

  •    You are willing to maximize your pension
  •    You want to benefit your beneficiaries after your death.
  •    You are willing to get steady income after a certain age.
  •    You are not interested in converting a term policy.
  •    you want your premium to remain in the same condition throughout your life.


Undoubtedly, a permanent insurance policy is are useful for some people for those people who have high incomes and are already maxed out their other tax-deferred accounts.  A permanent insurance policy can also be a useful part of managing your estate. And, in case if you have a special dependent who needs care after your death, then it is a really good option.


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