Unlike term life insurance, permanent insurance policies such as universal life, variable universal life and whole life provide long-term financial protection. This type of insurance will cover you for the duration of your life and continued on time premium payments. Permanent policies provide you with not only a death benefit but in some situations a cash savings. It is because of these extra perks that permanent life insurance tends to be more expensive than term life.
Some features of permanent life insurance also include level premiums so you want to purchase this type of insurance while you are considerably young and in good health. This will help decrease the cost of your premiums.
Permanent policies can also produce dividends. You earn dividends when your premiums turn out to be higher than your actual life insurance costs. If this is the case your insurance company may opt to pay you the difference in the form of a dividend. Because it is difficult in predicting your actual costs, dividends are not guaranteed.
Guaranteed cash values are another plus to purchasing permanent life insurance. Some of the cash you pay into your policy may accumulate as a guaranteed cash value. This means if you cancel your policy these cash values become yours. Or you could simply borrow against them as a policy loan while your policy is still in effect. The actual quantity of your guaranteed cash value is dependent upon the kind of policy you purchased, its size and the length of time you’ve had it. When borrowing against your cash value you must remain cognizant of the fact that the amount you borrow will decrease your death benefit and your guaranteed cash value.