Permanent life insurance is very different than term life insurance. Permanent life insurance is best suited for long-term needs. It helps to generate additional retirement income and provides cash for estate planning. The three types of permanent life insurance are:
- Universal life
- Whole life
- Term to 100
Universal Life
Universal life insurance provides guaranteed lifetime coverage and also includes an investment component that generates tax-deferred savings. Policy holder makes deposits, with some flexibility in terms of the amount, a portion of the deposit is used to pay the premium and the rest is invested and grows tax-sheltered.
Whole Life
Whole life insurance provides guaranteed lifetime coverage as well as savings that build over time, but the premium you pay is fixed and doesn’t change from year to year. Some policies also entitle the policy holder to receive dividends from the insurance company.
Term to 100
Term to 100 insurance doesn't offer a savings component, thus it is the permanent life insurance that costs the lowest. This policy is a good choice if you need long-term insurance protection but not the additional savings feature that universal and whole life policies offer.
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