Life insurance is an asset that guarantees the financial security of the people who depend on your income. Life insurance offers peace of mind and prepares the policyholder and their dependents for their passing. There are many different forms of permanent life insurance policies and selecting the right policy for you is entirely dependent on preference and need.
Ensuring that your dependents can continue their current lifestyle when you pass shouldn’t be a daunting task. Life insurance makes comfort and stability possible by becoming your greatest and most protective asset.
What Is Permanent Life Insurance?
Permanent life insurance never expires. As long as you make the premium payments according to the terms of the policy, your beneficiary will receive the death benefit. This coverage remains in place until the death of the named insured.
Permanent life insurance features an additional asset known as cash value. The cash value of your policy grows over time and can be a useful component of your permanent life policy. Cash values enable policyholders to reduce policy premiums, increase the death benefit, or add additional coverages. Cash Value increases with each premium payment on a tax-deferred basis.
Some riders are unique to permanent life policies. Riders can protect the policyholder in the event of their disability, dismemberment, or premature death. There are also riders available that provide additional coverage to your children or spouse. Riders can also be used as safeguards in the event of late premium payments.
Types of Permanent Life Insurance
Permanent life insurance policies are all unique to the policyholder. Added riders, face amounts, and premium payment amounts are different for each policyholder. Insurance underwriters play a key role in determining the amount of premium required for the policy as well as determining the potential risk associated with the named insured.
Universal Life Insurance
Universal life insurance is a flexible option you can choose when selecting a type of permanent life insurance policy. For instance, Universal policies allow the potential policyholder the benefit of a decreasing or increasing death benefit. This may prove to be useful if you experience a fluctuation in your income.
Death benefits of universal life insurance policies always ultimately align with the cash value. When this occurs, policyholders have the option of decreasing the frequency of premium payments or simply not paying them at all! The cash value generated accumulates on a tax-deferred basis and grows with each premium payment.
Indexed Universal Life Insurance
Indexed universal life insurance is similar to standard universal life insurance. However, the key distinction between the two lies within the accumulation of the cash value. An indexed universal life policy’s cash value is linked to an equity index that bases interest earned upon the current state of the market.
Many indexed universal life policies offer a guaranteed minimum interest rate for fixed products. This can be very reliable. The policyholder has the added benefit of selecting a fixed product or a product linked to an index to secure higher returns.
Guaranteed Life Insurance
The process of signing up and qualifying for a life insurance policy is made simple with a guaranteed life insurance policy. If you are ineligible for most forms of life insurance coverage, then guaranteed life insurance is right for you!
In regards to guaranteed life insurance, policyholders must make premium payments for a total of two years before a beneficiary can make a claim. Most guaranteed life insurance policies feature a maximum death benefit of $25,000, which is sufficient to pay for modest debt and funeral expenses.
The benefit of guaranteed life insurance is that underwriting requirements are much more lenient and almost all applicants are accepted. In short, guaranteed life insurance policies are a sure-fire way to ensure the financial security of your loved ones in the event of your passing.
Now that you’re a permanent life insurance expert, you can make an informed decision about which permanent life insurance policy is right for you. If you still have questions, Begus Insurance Group agents are happy to provide insight for potential policyholders who require guidance. Contact Begus Insurance Group today for a free consultation!