There are three main types of permanent insurance – universal life, whole life and term-to-100 life. Below, we’re going to look at each type of permanent life insurance and review the pros and cons.
One pro that is the same for each type of life insurance is that the death benefit and investment portion are tax-free and creditor-proof.
Universal Life Insurance
Pros of Universal Life Insurance
- Flexibility – If your finances fluctuate, you can opt to pay lower on higher premiums.
- You have strategy choices with respect to the cash accumulation component of your policy.
- You can borrow or withdraw from the cash accumulation without cancelling your policy, as long as you have built up enough money.
Cons of Universal Life Insurance
- Premiums are usually for your entire life.
- You should have some experience with investments because you need to follow how the cash accumulation component is doing, so you can request changes as needed.
Whole Life Insurance
Pros of Whole Life Insurance
- You have your policy for your lifetime, and your premiums are guaranteed so they’ll never increase.
- The savings component is managed by the insurance company.
- If you need a non-taxable loan, you can borrow from your policy.
- You can repay the loan, or have the insurer take it out of the death benefit portion.
Cons of Whole Life Insurance
- Whole life insurance is expensive because the premium has to include the investment component.
- Your flexibility is limited – you usually don’t have the ability to skip payments in the early years.
Term-to-100 Life Insurance
Pros of Term-to-100 Life Insurance
- It is less expensive than whole life insurance.
- If you want to stop paying early, there is usually a reduced ‘paid up’ amount of insurance that will remain.
Cons of Term-to-100 Life Insurance
- Your policy can lapse if you don’t pay your premiums.
- There is not investment component.
As you can see, there are many options with permanent life insurance. If you’re still unclear, or want a permanent life insurance quote, please send us a note or call toll free to 1.888.498.5288.