Permanent policies, just like they sound, are designed to be paid into and last throughout your entire lifetime.

When funded properly, permanent life insurance policies will make a death benefit payment.

Common permanent policies include Whole Life, Universal Life, and Variable Universal Life policies. Unsurprisingly, permanent insurance is more expensive relative to term policies.

It’s important to keep in mind that most permanent policies have a cash or investment account associated with them, depending on which type you buy.

When you make your payment (premium) towards the policy, it is divided to cover the cost of insurance and to also fund your cash or investment account partly.

You usually can take a loan or a partial withdrawal from the cash or investment account or use it to later fund the cost of insurance.

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Term Life Insurance or Whole Life Insurance?

Like renting a home or buying a home where renting may be better for short-term requirements and buying a home may be better for long-term (more than 5–6 years stay), term insurance is best for specific or short-term needs and whole-life may be better for whole of life duration and or possible needs.

Benefits vs. Disadvantages

The beneficial features of a Whole Life plan include:

  • Guaranteed premiums that never increase.
  • Tax sheltered investment that never decreases in value despite downturns in the market.
  • You cannot outlive the benefits of a Whole Life policy.
  • Cash value component that increases over time.
  • Coverage for life that also provides your family with a
    tax-free death benefit that will never decrease in
  • Death Benefits are paid to the beneficiary without requirement to probate.

The Disadvantages of this type of insurance are:

  • Cost of coverage is higher than Term Life Insurance policies. Since permanent policies offer lifelong coverage, they come with a higher price tag.
  • It’s not as flexible as other permanent policies, like universal life.

The cost
of Whole Life insurance


The cost will depend on several factors including coverage amount, age, gender, smoking status, health, and morbidity at the time of purchase, initially, it can cost five
to ten times more than a term policy.

Whole life insurance – Cash Value

Cash Value: the cash value of a whole life insurance policy is the amount of money that is available to the policy owner prior to the death of the insured.

All whole life policies accumulate cash value.

Cash value can be accessed in the form of a loan or as cash in the event of surrender of the policy.

The cash value of a traditional whole life insurance policy is generally guaranteed, and the fund does not earn interest.

If a whole life insurance policy is participating”, they pay dividends in addition to the cash value.

Dividends are essentially a return of excess premium and can also be accumulated as part of the policies total cash value.

Interest may be paid on accumulated dividends.

Dividends can also be used to reduce the policy premium, pay for additional paid-up life insurance, or received in cash.

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