Benefits of Permanent Life Insurance
Permanent Life Insurance is a type of Whole Life or Endowment insurance policy. It not only insures the life of the policy holder but also offers the option of accumulating a cash value and guarantees the reimbursement of a certain amount at the end of the policy period.
However, most policy buyers compare such a plan with Term Life Insurance policy which guarantees insurance only for a specified period such as five, ten, fifteen, twenty or twenty-five years without any benefits of a cash value. Moreover, the insured sum is paid to the beneficiary only in the event of the death of the policy holder during the insurance period. Most policy buyers are of the opinion that this feature of a payout in the event of death only, limits their value for money when considering the insurance plan as an investment option in addition to providing financial protection to their family and loved ones. Thus, the Permanent Insurance plan is considered more beneficial than the Term Life policy.
The Insurance plan is a fixed premium fixed return policy which guarantees accumulation of a cash value and a fixed rate of premium.
However, individuals seeking richer benefits on investment in return for the high premium rates payable on the Insurance policy and desired more flexibility. Most policy buyers considered the scope of the Insurance policy to be very limited. Therefore, several insurance companies in the US started offering an alternative called Universal policy plan.
The benefits of Insurance policies expanded with this type of alternate plan which offered consumers the flexibility to decide when and how much premium to pay. The policy also provides consumers with the option of withdrawing cash without any repayment interest that is normally associated with borrowings. Thus, the Universal Life Policy retains the fixed investment performance feature of the Whole Life policy and provides more benefits than a simple financial protection plan.
Thus, the Permanent policy guarantees a minimum benefit at a fixed rate of premium. Besides, policy buyers can earn dividends determined by the insurance company’s return on investments. In addition to this, the interest paid on a Permanent Life or Whole Life plan is adjusted annually as compared to Universal Life where interest paid is adjusted monthly.
Finally, as is the case with other insurance products, Permanent Life Insurance also offer several policy options and is therefore very beneficial to the policy buyer.
