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Permanent Life Insurance: Who Should And Who Shouldn’t Buy It?

senior couple considering buying permanent life insurance by talking to agent

There are many factors to consider when determining if a permanent life insurance policy is right for you. Permanent life insurance provides coverage for those whose loved ones have become dependent on their income. Ask yourself: “Who is dependent on my income?” and “Can I afford the premiums associated with permanent life insurance?” Permanent life insurance premiums are not inexpensive. However, the protection and coverage options that come with a permanent life policy can be beneficial.

Permanent Life Insurance

Permanent life insurance is a long term commitment to protecting the financial stability of your loved ones in the event of your passing. It is life-long coverage with an exceptional death benefit that will provide your dependents with peace of mind.

Is Permanent Life Insurance Right for You?

Permanent life insurance exists to provide financial security for the dependent of the deceased. There are many things to consider when purchasing this type of insurance. Consider the following:

Do You Have Dependents?

Dependents come in all shapes and sizes. Dependents could be your children, spouse, siblings, parents, and more. You can designate those who depend on your income as the beneficiaries in any life insurance contract. The beneficiaries receive the death benefit of your insurance policy when you pass away.

A major thing to consider is the state of your budget right now and whether or not your family or loved ones are struggling financially. On the other hand, maybe you are very successful and your dependents have grown accustomed to a certain lifestyle.

Whatever the case, if you have a family or loved ones who are dependent on your income to survive, your passing may have a critical effect on their livelihood. Making sure that your dependents will have financial security if you pass on is an honorable pursuit.

Do You Need a Savings Component?

All permanent life insurance policies incorporate a cash value component. Cash value grows throughout the lifetime of the policy as long as the policyholder pays premiums on time. The higher your premium, the more cash value you will accumulate.

You can use a policy’s cash value for many things. For example, you can use it to increase the death benefit, reduce the premium, and add additional coverages such as riders and additional term policies. Term policies can be used as leverage to secure loans. So, if you are planning on purchasing a new home, an annual renewable term rider could be beneficial.

In addition, cash values can be borrowed from at any time. If you are experiencing financial struggles or significant debt you can extract cash value from your policy. Policies can also be surrendered for their cash value if you are unable to pay the premium or require more funds for retirement.

Can You Afford the Premium?

Permanent insurance policies are equipped with significantly large death benefits, cash value components, and also offer added riders. All of these features of a permanent life policy can make for an expensive yet cost-effective premium. 

Premiums vary based on permanent life insurance policies due to underwriting conditions regarding your age, health, and occupation. Regardless, premiums for a permanent life policy are normally higher than those of term life policies because of their large death benefits.

Consult with an Agent

Consulting with an agent and going through the application and underwriting process is the most effective way to determine if a permanent life insurance policy is right for you. Consult with Begus Insurance Group today for expert opinions from licensed professionals!