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The Benefits of a Permanent Life Insurance Policy

Permanent life insurance in a nutshell is a set of life insurance policies that cover the insured over their entire lifespan, so long as they pay premiums. Hence, whether the insured passed away as soon as he/she purchased an insurance cover or passed away many years later, their beneficiaries would still be eligible for receiving a death benefit. Additionally, most permanent life insurance policies include a cash value component which is more or less like an investment account that allows borrowing or withdrawing from the policy’s cash value as soon as it becomes a large sum. Permanent life insurance policies like universal and whole life insurance, provide coverage over a policyholder’s entire life, offering a cash value component which grows over the years and can be used in taking out loans or paying premiums. While term insurance is deemed most suitable for the majority of people, there are plenty of reasons why you should consider taking a permanent life insurance cover. Highlighted below are some potential benefits of a permanent life insurance policy.

As mentioned before, permanent life insurance policies can earn significant cash value. It is true that all kinds of life insurance offer a death benefit to the insured’s beneficiaries, which are often tax-free. Typically, permanent life insurance policies include a cash value component which acts as protection in addition to the death benefit provided to beneficiaries. The benefit of this additional component is that it can be borrowed from the policy as a loan. The permanent life insurance policies thus are given a liquidity characteristic due to the provision of this cash value component. It is worth noting that loans reduce both the death benefit and cash value of the policy similar to the amount borrowed.

Policyholders of permanent life insurance policies get provided with lifelong coverage. Permanent life insurance policies always remain in effect so long as the required premiums are paid, and can only be terminated upon death of the insured or if they choose to surrender the policy. On that note, some permanent life policies mature at specified age, usually 100 or 121 years. In the event that the insured is still living at the stipulated maturity age, they are no longer required to pay premiums however, the death benefit will still be distributed to his/her beneficiaries upon their death. However, other policies simply disperse the death benefit of cash value if the insured is still living at the stipulated maturity age.

A key benefit of whole life insurance policies is that the premiums required to be paid never change. The premium declared upon issuing of the policy stays the same regardless of the policyholder’s age.

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