Unique Features of Permanent Life Insurance
There are two principal types of life insurance, namely term and permanent life insurance. As the name suggests, term life insurance provides you with protections only for certain period of type, while permanent life insurance provides you with lifelong protection. Regardless of your age, the policy will pay a death benefit.
The premium rate for permanent life insurance is generally higher. Why? It is because there is a saving element in it. The saving will grow upon a tax-deferred basis. It means that longer the period is, the more savings you have. In addition, the permanent life insurance has several features, which make it more interesting.
Why Permanent Life Insurance Is Interesting
- Flat premium rate. The premium rate is locked when you buy the policy. It means that the premium will not increase or decrease as you age. It also remains flat when your health status changes.
- Cash savings. As described above, you can accumulate cash savings with time. Some insurance policies may even allow you to withdraw some of the money.
- Flexibility in the use of cash saving. Depending upon the policy, there are several ways to use the cash savings. Firstly, you can use them to pay premiums. This is helpful in case that you have financial hardships, which make you fail to pay monthly bill. The cash can be used to continue your insurance protection.
- You can also use the cash saving as collateral for the loan from the insurance company. Again, when the policy allows you to do it, you can borrow some money from the insurer and use the cash saving as collateral. The loan requirements are usually much fewer as no credit check is required and some other restrictions are eliminated.
So, permanent life insurance can be a good choice as you have more options. Make sure to choose one based on your needs, since the permanent insurance policies may come in difference schemes, such as whole life, variable life, or universal life insurance.