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Selecting Permanent Life Insurance

ocp-9Consumers are confused when selecting permanent life insurance and it’s easy to see why. New varieties of this useful product have appeared in the last 25 years and the insurance industry has done a poor job explaining them to the public.

The difference between permanent and term life insurance is that permanent coverage never goes away. Once you buy the policy you have the coverage and your heirs will receive money when you die. Yet permanent life insurance can be intimidating because it is more expensive and complicated.

Most people select permanent life insurance because of the benefits. They don’t have to pay a monthly premium to maintain coverage, funds in a life insurance policy are tax deferred and can be passed to heirs without taxes and there are more investment options available. Another big advantage is that you can borrow against many different permanent life insurance policies.

The reason permanent life gets so confusing is all the options available. A lot of people have a real difficult time selecting the permanent policy that they want. The most basic permanent life policy is whole life insurance. Whole life is a basic insurance policy that pays a set benefit based on the amount paid in. Whole life is easy to understand but it is limited, and the funds in it are vulnerable to inflation. Find the Right Life Insurance for the Right Price. Get a Rate Quote Now.

Whole life can be a good choice if you just want to leave some money behind to settle your debts and cover funeral expenses.

Universal life insurance is one of those new products that have popped up in recent decades. It’s an insurance policy combined with a money market account or CD. The idea is that the CD or money market will generate interest that will accumulate and increase the final benefit. A lot of people like universal life because it is fairly cheap.

A variable life insurance policy is an insurance policy combined with an investment account similar to a mutual fund. Part of the funds will be invested in the stock market, bonds or other instruments. The idea is to generate a lot more income to leave to heirs.

Your choice of a permanent life product should be based upon your needs. Older persons that want to protect their income might be better off with whole life.
Younger individuals that want to protect the assets they want to leave to heirs from inflation might be better off with a universal or variable policy. Such policies can also protect at least some of your funds from taxes.

Talk to a number of different advisors before you purchase permanent life insurance and go online to check out products and policies. Make sure that you’re doing business with a reputable insurance company with a good rating and that the product meets your needs before you buy it. Don’t tie your money up in a permanent life policy until you know what you’re buying.