Permanent Life Insurance and Ice Cream

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Permanent life insurance is a catch all phrase for various forms of life insurance.  Some policies are whole life insurance, some are universal life insurance, guaranteed universal life insurance or cash value life insurance.

They all exist to provide lifetime life insurance coverage and they do not expire like a term policy.

Does permanent life insurance make sense for you and your family?

It might, if you:

  • Are looking for a policy with a guaranteed death benefit – a “when you die” policy, not an “if you die” scenario
  • Like the idea of getting access to a cash portion of your life insurance tax free before you’re dead
  • Like the idea of your life insurance acting as a savings account
  • Are young and relatively healthy
  • Have a sizable estate and a sizable income

If term life insurance is the vanilla of the life insurance world, then permanent life insurance is the chocolate chip mint rocky road sundae with fudge on top.

Like an ice cream sundae, there are many options to consider.  When you explore these policies, it pays to work with an independent underwriting expert who has access to the entire market.

Want to know more?  Read on!

To skip to the ice cream, just fill out a quote request below and choose “Lifetime” for your type of insurance.

What is Permanent Life Insurance?

Permanent life insurance is life insurance that you can keep for your entire life as long as you continue to pay the premiums. This type of life insurance allows you to build up a cash value on the plan that is tax-deferred. This cash value over time will accrue, and in addition to the life insurance benefit paid out to your beneficiary, you’ll also be able to use this money for your needs at any time.

This money can be borrowed from the policy and used for:

  • Putting a down payment on your house
  • Paying for your child’s college expenses
  • Drawing income during retirement
  • Taking that long-awaited dream trip, or
  • It can even be used to continue paying the premiums of your insurance policy in case you’re unable to make payments.

If you are looking for a long term solution to life insurance, you must consider permanent life insurance policies.

Here’s the trade off with permanent life insurance

Often, the premiums for this type of insurance can be more expensive than for other insurance types (like term life insurance).  However, using an independent life insurance expert and shopping around will help.  You can get great permanent life insurance from an “A+” rated company at a payment you can afford.

“Cash Value” Versus “Face Amount” in Permanent Life Insurance Policies

Permanent life insurance policies act as not only an insurance policy that will pay out to your beneficiaries in case of your death but is also a savings vehicle that is tax-deferred.

With a permanent life insurance policy, there are two different values that you need to be concerned with:  cash value and the face amount.

The cash value of your permanent life insurance policy is the amount of money that is saved within the policy that you can borrow against.

The face amount of your permanent life insurance policy is the amount that will be paid out to your family if you die while the policy is in force. If you were to surrender your policy, you would get the cash value of the policy rather than the face value.

Questions Answered
Cash value versus Face Value – Check it out!

As long as your policy is still in good order, your family will receive the face value minus any loans you have when you die. For instance: assume you have a $500,000 face amount permanent life insurance policy with $300,000 in cash value.

You take out $200,000 tax free from this policy to purchase a condo in Florida.

When you die your family will receive $300,000.  This is the face value ($500,000) minus your outstanding loan ($200,000).

What is Term Life Insurance?

Term life insurance is insurance that only lasts for a particular amount of time. This term limit is something that the policyholder chooses based on the premiums.  A 10 year term is usually less expensive than a 30 year term.  Locking in the term for a longer time will make the monthly premiums go up in cost.

There is no cash value in a term life insurance plan and that is why the premiums are less expensive than a permanent life insurance plan. In fact, term life insurance is often very affordable for just about any budget.

The Catch with Term Life Insurance

Once the term limit is up, that’s it.  Your policy will end, and you’ll need to purchase a new policy.  You will be older, and insurance premiums only go up as you get older.  Your life insurance premiums will be more expensive in the future.

This policy is one for someone that is looking for a shorter-term solution to their insurance needs as these policies can be purchased for anywhere between five and thirty-years.

Differences Between Term and Permanent Life Insurance

Term Life

  • Has a set amount of time
  • More affordable premium amounts
  • No cash value

Permanent Life Insurance

  • Policy stays valid as long as the premiums are paid
  • More expensive premium amounts
  • Builds up cash value with each premium payment
  • Able to borrow against the cash value of the policy
  • Cash value can pay the premiums

Which Is More Beneficial?

If you can afford it, the life insurance policy that is more feature packed and beneficial is permanent life insurance.  The cash value makes it more attractive because you can use that money while you are still alive.

Makes sense, right? If you have to purchase life insurance to protect your spouse and children when you die, you might as well purchase a policy that is going to act as a savings vehicle and never expire.

This is the deluxe sundae, not the vanilla ice cream cone.

Digging deeper into this question will change this answer based on the person. Not everyone can afford the monthly premiums that come with permanent life insurance plan and that is OK.  This is where term life insurance can be more beneficial, because term life will fit into every family budget.

The simple answer here is that you should pick the policy that will be the best for you and your family.  For most of our clients, a mix of term life insurance and permanent life insurance works for them.

Permanent Life Insurance and Heart Problems

People with heart problems often think they won’t qualify for life insurance because of their health.  If they do qualify, they think that their premiums would be astronomical. This false line of thought may make it so that they don’t even look into purchasing permanent life insurance.

Considering that heart disease is the number one killer in the United States, that means that there are a lot of people out there avoiding life insurance quotes due to fear.  Don’t fall for this!

The key to remember is to use our independent underwriting experts to shop around with several life insurance companies on your behalf.  That is how you find the best life insurance.  This is even more important since the monthly payments for permanent life insurance policies are usually higher than similar term policies.

In short, it pays to work with an expert.

Get your health notes from your doctor before this process as any health improvements you’ve made since your heart attack or other heart issues can help your case for lower premiums. In addition, if it’s been some time since your heart attack, that can be good for your quotes, as well.

We will consider your entire health picture, make a solid case for your approval, and then partner with the top rated life insurance company who gives you the best value.

Questions Answered
Are permanent life insurance policies easier to qualify for?

Life insurance companies will sometimes decline a term policy due to health conditions.  In these cases, there are usually permanent life insurance options still available.   Clients denied term protection were sometimes counter offered permanent protection instead by the same company.

So yes.  It is easier to qualify for permanent life insurance than it is for term life insurance.

Who Typically Buys Permanent Life Insurance

There are a number of people that are good candidates for purchasing permanent life insurance.

  • People with young families that want to create equal inheritances for their children can benefit from these policies.
  • Parents of special needs children that will be life-long dependents would benefit from this type of policy.
  • Those that have an estate that is subject to estate tax will benefit from this type of policy.
  • Those who cannot otherwise qualify for term life insurance would buy permanent life insurance.
  • Those who like the added cash value and the benefits permanent life insurance provides.

In practice we find that many families own both permanent and term life insurance.  They are both different pieces to the same financial puzzle.

How Much Will Permanent Life Insurance Cost Me?

The cost of permanent life insurance will be dependent on a number of factors, and there’s a good chance that you and your best friend could apply for insurance policies and have different premium amounts quoted to you.

Some of the factors that go into determining your permanent life insurance premiums are:

  • current age
  • gender
  • lifestyle / occupation
  • criminal / driving / financial records
  • health conditions
  • family history of disease

Below we will show you rates for permanent life insurance by age bracket.  These are real rates that you could qualify for today, not some phony-bologna numbers!

Life Insurance comparison for a healthy 30 year old female non-smoker

 

Actual Life Insurance Rates from an A+ Rated Insurance Company.

Face Amount $250,000 $500,000 $1,000,000
20 Year Term $11.16 $17.06 $29.75
30 Year Term $16.84 $27.56 $42.00
Lifetime $85.23 $147.92 $270.83

As you can see, lifetime protection is about 5X – 6X more expensive than a comparable 30 year term rate for 30 year olds.

Keep in mind that males in the same age bracket will pay 20% – 25% more than females.

Life Insurance comparison for a healthy 40 year old female non-smoker

Actual Life Insurance Rates from an A+ Rated Insurance Company.

Face Amount $250,000 $500,000 $1,000,000
20 Year Term $14.87 $24.94 $44.28
30 Year Term $24.72 $43.20 $70.00
Lifetime $102.08 $215.03 $367.00

For 40 year olds, the cost of lifetime protection relative to a 30 year term policy goes down.  It is 4x – 5x more expensive here.

Once again, It’s worthwhile to note that males in this same age bracket will pay 25% – 30% more for their life insurance.

Life Insurance comparison for a healthy 50 year old female non-smoker

Actual Life Insurance Rates from an A+ Rated Insurance Company.

Face Amount $250,000 $500,000 $1,000,000
20 Year Term $31.72 $56.39 $104.57
30 Year Term $53.59 $101.46 $175.00
Lifetime $152.71 $292.50 $559.17

Now the range begins to narrow.  At 50 years old, permanent life insurance coverage is about 3x more expensive than a similar 30 year term product.

50 year old men can expect their life insurance to be 30% – 35% more expensive than women of the same age.

Final Thoughts on Permanent Life Insurance

Life insurance doesn’t have to be a tricky subject.  At the beginning of this article we compared it to an ice cream sundae.

Working with the underwriting experts at Heart Life Insurance is a smart bet for making sure you get the right life insurance for your family.  Finding the right policy is not rocket science, even if you suffer from heart problems.

Whether you choose permanent, term or a blend of both, what is most important is that you protect your family right now.

We are not guaranteed a tomorrow, and your rates only go up as you age.  There is no reason to delay.

Let’s get to work today.

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