We covered Term Insurance in our last blog. Now lets talk about Permanent Insurance. This is a policy gives you life-long coverage as long as you continue to pay your premiums. Permanent Insurance is also referred to as Cash Value policies.
The cash values accumulate on a tax-deferred basis. They can be used for many purposes, down payment on home, college education and even provide you with income during retirement. When you borrow from the cash value account it is like a loan and must be repaid with interest, although the interest rate is usually quite low. If the loan is not paid back, the death benefit is reduced by the amount of the loan. The cash-surrender value will also be reduced by the amount of the loan.
All life insurance is to replace income. The question is how long will you need it? Some feel that they only need it while they have a mortgage on their home or while children are still in the household. This may be true, but what happens to your spouse if you died right after one of these events and you had no life insurance? Would your spouse be able to continue the life style you have built together? Then there is the question of whether you want to be able to leave something for your children or grandchildren.
There are many policies to fit your need. As we talked about in our last blog, term insurance is for a certain period of time, this might be a policy that you use in addition to the permanent insurance, a time where you need additional coverage while you are putting children through college or have started a new business. Below you will find a few of our most popular permanent plans.
Universal Life
This is one of the most flexible permanent policies. You can determine the face value which can be adjusted if needed, the premium which can also be adjusted, they also have a minimum guaranteed interest rate. But remember you have to pay into it in order to build up the cash value.
No Lapse Guarantee Universal Life
This is for those that are looking for life long coverage but closer to term limits and cash value is not a priority. Premiums must be paid in a timely matter, but can last to age 121.
Whole Life
This is for a person who likes predictability over time. It provides you with the certainty of a guaranteed amount of death benefit and a guaranteed rate of return on your cash values. And you’ll have a level premium that is guaranteed to never increase for life.
There are many different policies for all ages. I know I have talked about it before, but one thing that is great to do is to take out a small policy for your children, rates are very low and it protects their insurability in case they would develop a health issue. They can have this policy for life and always add term if they need additional coverage or they can increase the coverage on their permanent policy, love the versatility.
Want to learn more or discuss what would be best for you…give me a call. I will be happy to discuss the options that best fit your need!
