Permanent life insurance is a type of life insurance that is kept for the life of the policy holder and paid out upon the death of the policy holder or once they have reached the age of endowment, 95+. This type of policy has a death benefit as well as a cash pay out value that accrues over time. Premiums are paid for a certain number of years, 10 to 15, but the policy remains active for the entire life of the policy holder.
Cost Of Premiums
The cost of the premiums for permanent life insurance is considerably higher than other types of insurance policies. This is mainly due to the high rate of return for the death benefit. Essentially, when a person purchases a $200,000 life insurance policy, then the policy guarantees that sum upon the death of the policy holder. If the policy holder does not pass away before the age of endowment, then the policy holder can get the cash value of the policy in return. This is a great return on investment if you can make it to 95+ years.
Who Benefits From This
The main people to benefit from this type of policy is the beneficiary of the policy. This policy is ideal for the primary bread winner in a family because it can ensure a measure of financial security if the policy holder dies. For example, if the policy holder is a woman in her thirties and she is the main financial support of her family, husband and three children, then if she were to die unexpectedly in a car accident then her husband would have a $200,000 cushion to pay bills and funeral expenses.
Since none of us knows exactly when we will die, then a permanent life policy is an excellent investment for those looking to provide extra financial security in the event of an untimely death.