Permanent Life Insurance

Benefits of Permanent Life insurance

It has often been stated that the life of a person cannot be equated to any amount of money on this earth. However, insurance companies have devised means of ensuring that those who are left behind in the event of an unforeseen death are taken care of. This has been achieved through the introduction of permanent life insurance plans that have taken advantage that people would like to ensure their children and families are well taken care of in the event of their demise.

Permanent life insurance, commonly referred to as life insurance is a plan whereby premiums are collected from the person whose life is insured for a period of time. This period may vary from a period of 10 to 30 years depending on one’s preferences. The amount assured is then paid out at the maturity of the policy to the policy holder or his beneficiary, whoever will be present at the time. In the event of death of the policy holder, permanent life insurance still honors its agreement and waives the policy premiums while still paying out the sum assured to the beneficiary at the maturity of the policy.

The premiums that are paid in this form of insurance are comparatively higher because the policy holder is set to benefit in all cases. In the event of maturation of the policy, they are paid the sum assured which has accrued interest. In the event of their death, their premiums are waived and the beneficiaries are still paid. This form of insurance is attractive amongst most those who have a conservative savings strategy because they prefer to hedge themselves against the risks of the unknown investment market through this scheme.

However, there has been criticism against this kind of insurance plan as relates to the excessive coverage that it provides to people. Some of the features offered in these policies are considered unnecessary for some people. It offers people with the option of investment for their savings in a manner that allows them to also borrow against the cash value of their investment. It may not be the best investment for one to make because of its combination of the aspects of protection and growth. While permanent life insurance aims to provide protection to a family in the event of death, it also presents various opportunities for investment that come with extra premiums. These extra premiums are often considered unnecessary when considered from the aspect of investment return.  

There are three options under which a person can be in permanent insurance. It can be a traditional whole life, universal or variable permanent insurance. Whole life insurance requires a fixed premium and provides the user with a guaranteed minimum growth. Universal option allows one to raise or lower their premiums and as such the resulting cash balance to which they are entitled to.

Variable on the other hand allows one to determine where their money is invested. It should however be understood that dumping a policy will cost the policy holder. There are cases whereby a policy holder is unable to pay their premiums for the policy and decides to terminate it. This will cost the policy holder such that even the premiums may be affected. It is thus important to critically evaluate options before taking out a permanent life insurance.

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