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Thursday, February 12, 2009

Permanent Life Insurance

From the Hoss's Mouth

The previous Hoss Cents Free Financial Money Magazine post explained term life insurance. Today's post outlines what is referred to as permanent life insurance.
There are three fundamental types of permanent life insurance: whole life insurance, universal life insurance and variable life insurance.

permanent life insurance

Whole Life Insurance: The policy is for the life of the insured. This type of policy has fixed premiums in exchange for a fixed benefit. A whole life insurance policy also permits the ensured to surrender the policy at any time for a cash amount which is usually less than the face value of the policy. In addition, surrender charges may apply.

Universal Life Insurance: For people who desire an investment avenue as well as a life insurance policy. Part of your premium goes towards life insurance (with a set benefit) and any portion over what is required as a life insurance premium is invested to provide an equity buildup. Premium payments above the cost of insurance are credited to the cash value, which overtime should increase. You do have a guaranteed minimum death benefit and a policyholder is allowed to accumulated interest to help pay premiums.

Variable Life Insurance: A type of cash-value insurance that permits the insurer to allocate a portion of their premium dollars to a separate account comprised of various investments, such as stocks, bonds, and/or mutual funds. Poor performance of these investments could cause the cash and/or death benefit to decline.

Remember, before you invest in a permanent life insurance policy, make sure you fully understand all the terms and conditions of the policy. Permanent life insurance policies can be extremely complex, and the small print must be read carefully.

The Hoss also says: pay your premiums on time. You do not want your policy to lapse.
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Stay on track,

The Hoss

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