Five Key Features of Permanent Life Insurance

1. Permanent Insurance Earns Cash Value

The type of life insurance you have will directly affect the cost of the policy.

One of the prominent reasons to purchase a life insurance policy is to ensure your loved ones receive a death benefit at the time of your passing. Permanent life insurance, however, also earns a cash value which can be borrowed from the policy. Some permanent life insurance policies will let you pay premiums using the cash value and if you were to ever give up your coverage, you should be able to get the cash value back depending on how far into the coverage you are. It’s important to note, though, that the cash value is separate from the death benefit, so depending on your policy, your beneficiaries may not receive any of the cash value.

2. Permanent Insurance Provides Coverage for Life

As the name gives way to, permanent life insurance is permanent, providing coverage for the span of your lifetime. As long as the premium is paid, the policy will only end when the insured passes away or surrenders the policy.

3. Permanent Insurance has Tax Benefits

Both term life insurance and permanent life insurance provide a death benefit to beneficiaries free of income tax. Permanent, however, has a few tax benefits that aren’t always available with term:

• The cash value for permanent life insurance is tax-deferred, similar to the gains of a retirement account
• If you receive dividends or cancel your coverage permanent life insurance coverage, there are no income taxes unless the amount of money you receive is more than the amount you’ve paid in premiums
• There are no taxes if you take out a policy loan as long as the policy remains in effect