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Permanent Life

Friday, May 21st, 2010

Permanent Life

Permanent Life insurance provides lifelong protection. These policies are designed and priced for you to keep for “the long haul”. Most permanent policies have a feature known as “cash value” or “cash surrender value”. This cash value can be borrowed or used to make premium payments. Keep in mind that the cash value is not the same as the policy face amount. There are many different types of permanent life insurance. The major ones are described below:

 Whole Life or Ordinary Life

This is the most common type of permanent life insurance. It is life insurance that is kept in force for your lifetime as long as the premiums are paid. All whole life policies build up cash value. Whole life policies also generate dividends that can be used to lower premiums, purchase more insurance or buy term insurance. Universal or Adjustable Life This product provides more flexibility. After the initial payment, premiums can be paid at any time in virtually any amount. The death benefit can be easily increased or decreased.

Variable Life

This type of permanent policy provides death benefits and cash values that vary based on the performance of a portfolio of investments selected by the insured. The cash value is not guaranteed. The insured assumes the risk of the value of the benefits based on the performance of the designated investments. The advantages of permanent life insurance are the guaranteed protection for your lifetime or a specific age, premium costs are fixed, and cash values are accumulated. The disadvantage is the cost of the premium in order to buy enough protection.