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lifeinsurance2-min

Permanent Life Insurance

What is Permanent Insurance?

Permanent life insurance is a type of life insurance policy that you may hold for the rest of your life without having to worry about premiums going up. Unlike term insurance – which is typically good for ten to twenty years – before you face a rate hike, the premiums on permanent insurance stay steady.

Permanent insurance is typically recommended for those needs you (your family) will always have regardless of when you pass away. These needs may include things like estate equalization for your children, leaving your spouse a benefit, or even leaving a legacy to a charity.

Additionally, permanent insurance can have other benefits such a growing cash value that you may borrow from.

The Types of Permanent Life Insurance

There are a variety of types of permanent life insurance. The most common types are whole life insurance and universal life insurance.

Whole Life Insurance

This is the simplest type of permanent insurance. It offers a steady premium and cash value grows within the policy. The insured may borrow from the cash value once it reaches a certain level. This can be a good option for things like a down payment on a house since the interest rate borrowing from a life insurance policy is quite good and eligibility is guaranteed as long as there is enough cash value in the policy.

Universal Life Insurance

With Universal Life Insurance, there is the option to pay a minimum premium or to overpay into the policy (these overpayments may be used to build cash value or purchase additional coverage). Universal life insurance is typically a good option for someone that has a fluctuating income (such as a salesperson or entrepreneur) as it allows them to pay more in months that they make more and pay less in months that they make less.

Other Types of Policies

Whole life and universal life insurance policies can also be further broken down into other types of policies. For example, a 20-Pay policy is a type of permanent policy that you only pay premiums on for twenty years but then you have the policy for the rest of your life as long as you don’t cash it out.

And if you are purchasing life insurance with your spouse, there is the option to get a joint first to die policy (which automatically pays the benefit to the surviving spouse), or a joint last to die policy (which pays the benefit to your choice of beneficiaries after the second spouse dies).

Additionally, there are an array of other benefits you may add on to a permanent life insurance policy such as extra insurance for your children, or the option to purchase more insurance at various intervals without further health checks.

How are Permanent Life Insurance Rates Calculated?

With Universal Life Insurance, there is the option to pay a minimum premium or to overpay into the policy (these overpayments may be used to build cash value or purchase additional coverage). Universal life insurance is typically a good option for someone that has a fluctuating income (such as a salesperson or entrepreneur) as it allows them to pay more in months that they make more and pay less in months that they make less.

  • Amount of coverage you are applying for.

  • Type of policy.

  • Whether it’s a single policy or joint policy with a spouse.

  • Age of insured.

  • Health of Insured. (medical tests may be required.)

  • Smoking status of Insurance.

Benefits of Life Insurance:

  • Cash value accumulates in the policy which may be borrowed from.

  • Leave a financial benefit to your family members or favourite charity.

  • Beneficiaries receive money tax free and without going through probate.

  • Optional benefits such as child riders and guaranteed insurability benefit.

  • Optional benefits such as child riders (a clause in your policy that covers your children) or

Choosing the Right Plan

There are a lot of options to choose from when it comes to permanent insurance so selecting the right plan may feel a bit complicated. Fortunately, by working with your broker, you can come up with a custom permanent life insurance plan that is right for you.