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.
Although permanent life insurance is more expensive than term life insurance there are methods of getting the most included in your policy for the least amount of money. Don’t just purchase the first policy you are offered, as with anything else you purchase shop around for the best rates. Purchase an appropriate amount of life insurance; don’t buy an excessive amount if not absolutely necessary. As stated earlier buy insurance while you are young and in optimal health, don’t wait until you find out you have a medical condition and suddenly decide you are not invincible and may need to purchase life insurance after all. If you smoke quit, if you drink do so in moderation. If you are overweight start exercising and watch your diet. If your employer offers life insurance, take it. These group insurance plans often are much cheaper than individual policies and in most cases you may not have to submit to a physical health screening.