Permanent Insurance

Our today's topic is Permanent Insurance which includes whole life, universal life and variable universal life policies. You may consider these policies, if you need protection for life but also want to build cash value on a tax-deferred basis for a variety of financial goals. The Whole life policy have been the most popular form of permanent insurance but universal life and variable universal life have increased in popularity in recent years because of the increased flexibility they offer to policyholders.

If you want permanent insurance, but have many financial commitments that require flexibility in meeting premium payments--such as mortgage payments, paying down debts or funding a child's college education--universal life (UL) may be for you.

With universal life, you control the amount and frequency of your premium payments and can choose between two death benefits options (within certain limits). The first, the level death benefit option, simply matches the policy face amount (the amount stated in the policy that's paid in case of death). The second, the increasing death benifit option, equals the face amount plus any accumulated policy cash values.

Policyholders can take loans against these cash values at any time. You may also take withdrawals (district from loans), generally after the policy's first year. Obviously, since cash values accumulate tax deferred, earnings, if any, become taxable only upon withdrawal. (Remember, though, that any withdrawals and/or unpaid loans will reduce the death benefits.) These features make Universal Life attractive for the long-term accumulation of assets which can then be used for different financial goals.

Now, we discuss a special kind of permanent life insurance: the Survivorship life insurance. Survivor Life policies pay a death benefit only after both insureds die. These policies are typically purchased by couples who have sizable assets and want to maximize the amount they leave to heirs or charities by allowing the beneficiaries to use the death proceeds to pay inheritance taxes.

Survivorship universal life (SUL) and survivor variable universal life(SVUL) simply combine the features of survivorship life with universal life and variable life in one policy. Because a survivorship life policy pays benefits only after both insureds die, it's usually a less expensive option than buying two seperate policies.