Download the Info on Permanant Life Insurance

Is Permanent Life Insurance for you? This type of coverage, unlike term life, does not expire and includes a tax-deferred investment or savings component ("cash benefit") in addition to a death benefit.

As a rule, permanent policies make sense as a savings vehicle for high-income families or for owners of small businesses with illiquid estates who want to pass cash to their heirs.

If you're considering permanent coverage, here's what you should know:

1. Types of policies.
   1. Whole Life charges a fixed premium to fund a guaranteed cash benefit and death benefit; the shorter the pay period, the higher the premium.
   2. Universal Life offers a flexible premium that combines term coverage with an account-like cash value; you can vary premium payments and the leftover funds earn a variable interest rate.
   3. Variable Universal Life is similar but lets you allocate cash value to investment options such as mutual fund–style subaccounts.
2. Medical exam: As with term policies, the insurer will usually require a physical exam. If you have health issues, expect higher premiums.
3. Investment benefits: Cash value accumulates tax-deferred while inside the policy until you withdraw it, and the plan's forced-savings feature can create a financial safety net.
4. Costs: Because a permanent policy funds both cash value and a death benefit, premiums are significantly higher than for comparable term coverage. Insurers also charge sales, administrative, and fund-management fees, plus a mortality charge. Surrender fees may apply if you cancel within an early period (often 10–20 years).

For related information on our site, see Permanent Makeup (Micropigmentation) Insurance.

If you want personalized guidance, ask an agent to review your situation and coverage options.

Frequently Asked Questions

How does a permanent policy differ from term life?

Permanent policies last for life and build cash value, while term life provides coverage only for a set period and typically has lower premiums.

Is the cash value taxable?

Cash value grows tax-deferred while inside the policy; withdrawals or loans may create tax consequences depending on how they are structured.

Can I borrow against the cash value?

Yes, many permanent policies allow policy loans or withdrawals, but outstanding loans reduce the death benefit and may have interest charges.