Life Insurance is an essential financial product that provides financial security to families in case of the policyholder’s death. Permanent life insurance is a type of policy that remains in force for the entire life of the insured person. It has several benefits over term insurance, including the accumulation of cash value, fixed premiums, and lifetime protection. In this article, we will discuss the best permanent life insurance policies available in the market.
Understanding Permanent Life Insurance
Permanent life insurance is a coverage that remains in effect throughout the policyholder’s entire lifetime. It does not expire like term insurance, which provides coverage for a limited period, usually between 5-30 years. Unlike term insurance, permanent life insurance also accumulates cash value, which grows over time and can be accessed by the policyholder during their lifetime.
There are two types of permanent life insurance policies: whole life and universal life. Whole life insurance offers level premiums and a fixed death benefit. Universal life insurance, on the other hand, offers more flexibility in terms of premiums and death benefits. It also allows policyholders to adjust their premiums and death benefits as per their financial needs.
Whole Life Insurance
Whole life insurance provides coverage for the insured person’s entire life, and the premiums remain level throughout the policy’s term. The policyholder pays the premiums, which are invested by the insurance company to accumulate cash value. The policyholder can borrow against the cash value or surrender the policy to receive the accumulated cash value.
Whole life insurance policies also offer a guaranteed death benefit, which is paid out to the beneficiary upon the policyholder’s death. It can be an excellent choice for people who seek long-term financial security and want to leave a legacy for their loved ones.
Universal Life Insurance
Universal life insurance policies also provide lifetime coverage, but they offer more flexibility in terms of premiums and death benefits. The policyholder can adjust the premium and death benefit as per their needs. Universal life insurance policies also offer an investment component that accumulates cash value, which grows tax-deferred.
Universal life insurance policies offer two types of death benefits: level death benefit and increasing death benefit. In a level death benefit policy, the death benefit remains constant throughout the policy’s term. In an increasing death benefit policy, the death benefit increases over time, usually at a fixed percentage or based on the policy’s cash value.
Benefits of Permanent Life Insurance
Permanent life insurance offers several benefits over other types of policies. Some of the benefits are:
Lifetime Coverage
Permanent life insurance policies provide coverage for the policyholder’s entire life. It guarantees that the policyholder’s loved ones will receive a death benefit, regardless of when the policyholder dies.
Cash Value Accumulation
Permanent life insurance policies accumulate cash value over time, which grows tax-deferred. The policyholder can borrow against the cash value or surrender the policy to receive the accumulated cash value.
Fixed Premiums
Permanent life insurance policies offer fixed premiums, which remain constant throughout the policy’s term. It makes it easier for policyholders to budget and plan their finances.
Estate Planning
Permanent life insurance policies can help in estate planning by providing liquidity to pay estate taxes or other debts. It also offers a way to leave a legacy to the policyholder’s loved ones.
Best Permanent Life Insurance Policies
There are many permanent life insurance policies available in the market, and choosing the right one can be challenging. Here are some of the best permanent life insurance policies:
MassMutual Whole Life Insurance
MassMutual is a highly rated insurance company that offers excellent whole life insurance policies. Its whole life insurance policies offer level premiums and a guaranteed death benefit. The policies also accumulate cash value over time, which grows tax-deferred.
Northwestern Mutual Whole Life Insurance
Northwestern Mutual is another highly rated insurance company that offers whole life insurance policies. Its policies offer guaranteed death benefits, fixed premiums, and cash value accumulation. Northwestern Mutual is known for its financial strength and stability.
Guardian Life Whole Life Insurance
Guardian Life is a well-known insurance company that offers whole life insurance policies. Its policies offer level premiums and a guaranteed death benefit. The policies also accumulate cash value, which can be accessed by the policyholder during their lifetime. Guardian Life is known for its excellent customer service and financial stability.
New York Life Whole Life Insurance
New York Life is a highly rated insurance company that offers whole life insurance policies. Its policies offer level premiums, a guaranteed death benefit, and cash value accumulation. The policies also provide riders that can enhance the coverage, such as long-term care and disability income riders.
Frequently Asked Questions
What is the difference between term and permanent life insurance?
Term life insurance provides coverage for a limited period, usually between 5-30 years. Permanent life insurance provides coverage for the policyholder’s entire lifetime.
How does permanent life insurance accumulate cash value?
Permanent life insurance policies accumulate cash value by investing the policyholder’s premiums in the insurance company’s general account. The cash value grows tax-deferred and can be accessed by the policyholder during their lifetime.
Can I borrow against the cash value of my permanent life insurance policy?
Yes, you can borrow against the cash value of your permanent life insurance policy. The interest rate on the loan may be lower than the rate on a traditional loan, and you do not need to undergo a credit check. However, if you do not repay the loan, it will reduce the death benefit of the policy.
Is permanent life insurance more expensive than term life insurance?
Yes, permanent life insurance is generally more expensive than term life insurance because it provides lifetime coverage and accumulates cash value. However, the premiums remain level throughout the policy’s term, making it easier for policyholders to plan and budget their finances.
Yes, you can change the premium and death benefit of your permanent life insurance policy. Universal life insurance policies offer more flexibility in adjusting the premium and death benefit than whole life insurance policies.
Conclusion
Permanent life insurance is an excellent financial product that offers lifetime coverage, cash value accumulation, and fixed premiums. It provides financial security to families and can be an essential part of estate planning. There are many permanent life insurance policies available in the market, and choosing the right one can be challenging. It is essential to compare the policies’ features, benefits, and cost before making a decision.