So, you’ve decided to purchase life insurance. Congratulations on a wise decision that will help bring you peace of mind and financial security for your family!
But now you have some important decisions to make. One of the first decisions you will encounter is deciding which type of life insurance is best for you. As you research your options, you will quickly notice that you have two primary choices: permanent life insurance and term life insurance.
Permanent life insurance vs. term life insurance
Permanent life insurance and term life insurance have one sure thing in common: They both pay a death benefit when the covered person passes away. These benefits can be used by beneficiaries to replace income, pay off debts, leave a legacy, etc.
However, permanent life insurance and term life insurance differ in terms of coverage length, premiums and cash value accumulation. Let’s take a closer look at each of these differences:
Advantages of permanent life insurance—a real-life example
As you can see above, both permanent life insurance and term life insurance offer solid advantages to policyholders. No matter which type of policy you choose, you are making a smart decision that will help bring you peace of mind and financial security for your family.
However, in many cases, permanent life insurance can be a better decision for the long run. Consider this real-life example:
Joshua is a 27-year-old plumber. He’s married to his wife, Julie, a stay-at-home mom, and together they have two young children. Joshua and Julie are purchasing their first house, and they smartly decide that it’s time to purchase life insurance for Joshua, just in case the unexpected happens.
Joshua and Julie decide to purchase a 25-year term life insurance policy. Joshua is young and healthy, so he locks in great, affordable premiums.
Fast-forward 25 years: Joshua is now 52 years old, and his term life insurance policy is expiring. Joshua and Julie still have many financial obligations. They still have a mortgage, in addition to an auto loan. Although their children are grown, Joshua and Julie still provide financial support to help with student loans. And although Joshua and Julie work hard to save for retirement, they know that their nest egg may not be up to snuff when it comes to future health care and long-term care expenses they may incur.
Joshua and Julie decide they still need life insurance protection, so they begin to look into their options. Joshua is now 25 years older, and although healthy, he now takes medication for high blood pressure. They quickly discover that life insurance premiums are much higher now than when they purchased Joshua’s first policy 25 years ago—due to Joshua’s older age and now pre-existing health conditions.
The couple settles on a permanent life insurance policy that will protect them for the rest of their lives. They know their permanent life insurance benefits may help the surviving spouse live a comfortable retirement, cover health care and long-term care expenses, and leave a legacy for their children. Plus, they appreciate the cash value accumulation, which they know they can access if they ever need or want the money for any purpose.
Joshua and Julie are glad to once again have peace of mind and financial security for their family. However, they do wish they would have selected permanent life insurance back when Joshua was 27 years old, when they could have locked in lifelong, lower premiums, and began accumulating cash value over the long run.
Benefits of permanent life insurance—5 reasons why you should get permanent life insurance
We are sure many pre-retirees out there can relate to Joshua and Julie’s situation. When you’re in your 20’s and 30’s, it can be difficult to foresee the lifelong need for life insurance. Plus, the lower premiums are attractive for many! Although the monthly permanent life insurance cost is typically more than a term policy, the benefits of lifelong protection and cash value accumulation often outweigh the lower premiums.
Here are 5 reasons why you should get permanent life insurance:
Permanent, lifelong protection
—don’t outlive your peace of mind and financial protection.
May allow flexible premiums and death benefit
—possibility for flexible premiums allows you to decide how fast to grow your cash value.
Cash value accumulates over time, in many cases tax-deferred
—potential to take out policy loans without paying taxes when your policy remains in force.
May access your cash value for any purpose
— potential to borrow from your policy’s cash value as needed to help fund college, pay off debt, supplement retirement income and more.
Death benefits are generally tax free to named beneficiaries and avoid probate, in most cases
—help leave a lasting legacy for your loved ones.
Bankers Life permanent life insurance options
Do you think permanent life insurance is a good option for you and your family? Bankers Life offers two types of permanent life insurance policies: whole life insurance and universal life insurance. Here’s what makes these policies unique:
Whole life insurance
Whole life insurance offers lifetime protection that builds cash value at a guaranteed interest rate. Permanent life insurance can help cover long-term needs, such as paying for final expenses, supplementing income or paying off debts.
Whole life insurance features and benefits:
- Level premium payments
- Guaranteed death benefit
- Simplified issue options
- Builds long-term cash value
- Access to cash value benefit
- Protects for your entire lifetime, rather than for a defined number of years1
- Avoids the delay and expense of probate, in most cases
- Death benefits are generally tax free to your named beneficiaries
Universal life insurance
Universal life insurance offers lifelong protection with the unique flexibility to adjust your coverage and premium amounts. The policy’s cash value accumulates tax deferred and can be used for any purpose to meet your financial goals.
Universal life insurance features and benefits:
- Coverage amounts as low as $30,000
- Available up to age 85
- Guaranteed minimum interest rates
- 15-year no-lapse guarantee
- Interest rate enhancement in policy years 16+
- Access to the policy’s long-term cash value through loans or withdrawals
- Flexible premium payments
- Ability to increase or decrease death benefit
- Lifetime protection
- Avoids the delay and expense of probate, in most cases
- Death benefits are generally tax free to named beneficiaries
Get a permanent life insurance quote
Are you ready to take the next step in obtaining the peace of mind and financial protection of permanent life insurance? Contact us here to get a quote.
Policies underwritten by Bankers Life and Casualty Company, Chicago, IL. Subject to state availability.
Insurers and their representatives are not permitted by law to offer tax or legal advice. The general and educational information here supports the sales, marketing or service of insurance policies. Based upon individuals’ particular circumstances and objectives, they should seek specific advice from their own qualified and duly-licensed independent tax or legal advisors
For information and educational purposes only. Does not constitute investment advice or a recommendation