Is Permanent Life Insurance Worth It?

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Permanent life insurance policies provide lifelong coverage and the opportunity to build cash value, which accumulates on a tax-deferred basis. While permanent life insurance is more expensive than term life insurance, it may be the best fit for you depending on your goals.

Term Life Insurance Permanent Life Insurance
Covers a set period of time Covers you for life
Does not have a cash value component Has a cash value component
Most affordable type of life insurance More expensive than term life insurance
Good for finite life insurance needs Good for those who want life insurance no matter when they die and to build cash value

If you discover you need permanent coverage later, many term life policies have a conversion option to convert the policy to a permanent one. There are multiple types of permanent life insurance, including:

  • Whole life insurance
  • Universal life insurance
  • Variable life insurance
  • Burial insurance
  • Survivorship life insurance

Permanent life insurance is good for people who want to build cash value and make sure there is a death benefit payout for their loved ones no matter when they die. Whole life insurance has fixed and guaranteed premiums, rate of return on cash value, and death benefit. Universal life insurance policies offer more flexibility than whole life insurance policies, while variable life insurance policies offer a death benefit with a cash value component that can be allocated across a variety of investments. Burial insurance is a small whole life insurance policy with a death benefit that’s usually between $5,000 and $25,000. Survivorship life insurance is usually a whole life insurance policy that insures two people—usually a married couple.

When considering life insurance, there is no one-size-fits-all solution. A financial advisor can help you figure out where life insurance fits into your overall financial plan.

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