Permanent life insurance- Definition, types and benefits

A life insurance policy that does not have an expiry date is known as permanent life insurance.

And permanent life insurance policy comes in different types. Either you buy the whole life insurance or the universal life insurance policy.

The same goes for term life insurance. Under the term life insurance, you can get a variety of policies.

However, permanent life insurance policies have many benefits you can enjoy while you live, and your family members get benefits too.

So, your decision to purchase a life insurance policy should be uniquely informed by the options they offer.

Furthermore, among other great features, you can find in this insurance is the ability to save money with your premiums and the payout your loved ones get in the event of your passing.

Though you can use the money you saved on your policy when you need emergency funds, however, the savings takes a lot of time to build up.

Sometimes, it takes the savings in your permanent life policy up to five years to build up the cash value. But once it does, you can borrow against it or withdraw it so long you keep to the terms and conditions.

The money you took out from your cash value savings can serve whatever purpose you wish. Whether it goes into your business, education, travel, or anything, no one regulates the usage for you. 

Also, the cash value you saved in your permanent life insurance is tax deferred. It means the policyholder will not be paying tax on the cash value build up so long the policy.

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Types of permanent life insurance

Permanent life insurance comes in different types. Though they have unique policies, what they all have in common is the permanent policy and cash value.

Meanwhile, there are four kinds of permanent life insurance policies for policyholders.

Whole life insurance

Also known as the traditional life insurance policy, it has all the components of the permanent policy. It builds cash value and has the beneficiary benefits payout.

Variable life insurance

The variable life insurance policy has a savings feature that is not exactly like the rest. The savings in this policy grows in selected securities. Now, the growth and build-up of the savings on this policy depend on how well the securities perform. You might lose your money if the stock market goes down.

Universal life insurance

This is still another permanent life insurance policy. However, this policy has a low premium, unlike other permanent policies.

Also, this policy builds cash with a savings option, and the premiums can be very flexible.

Variable universal life insurance

Variable universal life insurance policy lasts for life too. You can invest your premium savings in a sub-account or security like a mutual fund.

Furthermore, this policy mostly does not come as a stand-alone policy.

Permanent life insurance Vs term life insurance

Life comes with choices, and so do life insurance policies. Due to the various needs of people, anyone can pick up a policy that best speaks to their needs.

To some, it may be permanent life coverage, while to others, it may be temporary life coverage.

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As we know, term life insurance has an expiry date. It stays for a period of 10 to 30 years before it expires.

Also, you can renew your term life policy whenever it expires or convert it to a permanent life policy.

Another feature that makes this policy desirable is the option of a no-medical exam before purchase and low premium payment.

However, it does not have a beneficiary benefits payout, and it always expires before the policyholder passes away.

Still, it favors some people because of what it offers its policyholders like; workers who earn low incomes can benefit from the low premiums.

Can I cancel my permanent life insurance policy?

If you feel your permanent life policy is not serving you well again, you have the option to cut it short or cancel it.

If you want to cancel your coverage, you must go through the proper channel by facing the consequences.

Some permanent insurance coverage comes with a surrender charge. It is a sum of money that you must pay your policyholder before you can cancel your policy.

What is the most popular type of permanent life insurance?

Many people go for the whole life insurance policy. Though it has high premiums it offers many benefits to the policyholders.

Benefits of permanent life insurance

This type of coverage helps people to plan for their loved ones when they’re no longer around.

In the event of the passing of the policyholder, the family members who are the beneficiaries, receive the beneficiary payout. 

It will serve so many purposes, from paying for their mortgage, sending off the kids to college, paying back the debts they owe, or generally cushioning life and its ups and downs.

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Again, there’s no point in worrying about renewals of your policy because once purchase it, it stays throughout your life so long you keep paying your premiums.

For some people, the part where you can save up money from your premiums comes as the best part of this coverage. 

Taking a loan from your policy does not appear on your credit score, so that’s an advantage and a great way to borrow money.

This is what defines the adage, saving for rainy days. You escape the headache of running from pillar to post if you need emergency funds.

And not only that it does not appear on your credit, but you also will not pay tax on the money you borrowed from this policy.

The disadvantage associated with this coverage is the high premiums it comes with. The expensive premiums make it difficult for people who fancy it not to go for it. 


To summarize, this coverage removes the worries of thinking about how your family will cope financially in your absence.

Even if you are not privileged to purchase permanent coverage because of low income, remember that once you make more income, you can convert your term life policy to a permanent life policy. But you have to make sure that your policy provider offers this option. 

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