Permanent life insurance, also known as cash value life insurance, is a type of life insurance that provides coverage for the entire lifetime of the insured, as long as the policy is in force and the premiums are paid. Unlike term life insurance, which provides coverage for a specific period of time, permanent life insurance does not expire as long as the policy is active.
There are several types of permanent life insurance policies, including:
- Whole life insurance: This type of policy provides guaranteed coverage for the entire lifetime of the insured, and also includes a savings component, known as cash value, which grows over time and can be borrowed against or used to pay premiums.
- Universal life insurance: This type of policy provides flexible coverage that can be adjusted to meet the changing needs of the policyholder. The premiums and death benefit can be adjusted, and the policy also includes a cash value component that grows over time.
- Variable life insurance: This type of policy allows the policyholder to invest the cash value component of the policy in a variety of investment options, such as stocks, bonds, or mutual funds. The cash value and death benefit can vary depending on the performance of the investments.
Permanent life insurance policies are generally more expensive than term life insurance policies due to the longer coverage period and the inclusion of a cash value component. They can be useful for those who want to leave a legacy or have a long-term financial plan.