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Permanent Life Insurance: What Are the Pros and Cons?

senior couple talking to agent to purchase permanent life insurance

Permanent life insurance, also known as whole life, is an asset that creates a safety net for your loved ones in the event of your passing. The size of the safety net (death benefit) is entirely dependent on the needs of the policyholder and the needs of their loved ones. Some safety nets can be massive, and as a result, the premiums aren’t cheap. However, if you are in a position to allocate funds to an asset that will provide for your loved ones long after you’re gone, you may want to consider a permanent life insurance policy.

Pros Of Permanent Life Insurance 

Realistically, there are significantly more pros than cons when it comes to permanent life insurance. Policyholders may utilize a variety of benefits in their permanent insurance policy. 

Guaranteed Death Benefit

Death benefits are a guarantee throughout the life of a permanent life insurance policy as long as the premium is met. Death benefits do not change or lose value. However, death benefits may increase when utilizing the features of a permanent policy’s cash value component. 

Cash Value

All permanent life insurance policies offer a cash value savings component included within the policy. The cash value component of your policy grows exponentially throughout the life of the policy, as long as you pay premiums on time.

Cash value has many benefits. Insurers have the option of using the cash value to reduce policy premiums, increase the death benefit, and purchase additional coverage. Also, the insurer can borrow the cash value at any time.

Policies may also be surrendered at any time for the policy’s cash value. This is an important feature as it could benefit policyholders with financial hardship or who no longer require their policy. 

Riders

Riders are additional coverages that policyholders can add to any insurance policy. Moreover, riders offer various forms of coverage. For instance, if you work in a career field or have a family health history that makes you prone to disability, dismemberment, or death, some riders offer extended coverages and protection. 

In addition, some riders may reduce or waive policy premiums depending on current circumstances. There are also available riders that provide additional coverage for your spouse and/or children.

Settlement

In the event of a medical or financial emergency, policyholders have the benefit of selling their policy on the market. However, in order to sell your policy, it has to have a face value worth of more than $100,000. 

Selling your life insurance policy warrants compensation of four times more than what you would normally receive had you surrendered your policy for its cash value. Settlements can be very beneficial for those entering retirement and require additional funds. 

Cons of Permanent Life Insurance

There is merely one con when it comes to permanent life insurance: the cost of the premium relative to the policyholder’s income.

Premium Costs

Premium prices can be expensive in regards to permanent insurance policies. However, the premium rate is always dependent on factors like:

  • the amount of the death benefit
  • additional riders and coverages
  • underwriting requirements.

If you are relatively young and healthy, underwriting may determine that your risk level is significantly low; as a result, insurance companies are more likely to offer you a more convenient premium.

Learning More About Permanent Life Insurance

Begus Insurance Group has offered its high-caliber life insurance knowledge to potential policyholders for over a decade. If you have questions regarding permanent life insurance or require more information, simply contact Begus Insurance Group today for a free consultation!