When it comes to life insurance, there are two main types: term and permanent. Permanent life insurance is a bit more complex than term, so it's essential to understand what it is before you decide which is the right choice. This article will discuss what permanent life insurance is and how it works.

What are the benefits of permanent life insurance?

Permanent life insurance may provide coverage for your entire life and differs from term life insurance, which only covers you for a certain period of time, usually 20 or 30 years. Permanent life insurance policies may also have a cash value component that depending on the type of permanent policy, can earn interest or dividends over time. The cash value can be used to pay the premiums or can be borrowed from the policy.

One of the main benefits of permanent life insurance is that it provides death benefits. If you die while your policy is in force, your beneficiaries will receive a death benefit payout. The death benefit can cover funeral costs, outstanding debts, or any other expenses your loved ones may have. There are no rules on how this money is spent.

The other advantage of permanent life insurance is that some policies offer a variety of living benefits that can be extremely helpful in certain situations. For example, if you become disabled and are unable to work, many policies will provide a portion of your death benefit as income replacement. This can help to keep you and your family afloat financially during a difficult time. Additionally, if you are diagnosed with a terminal illness, some policies will allow you to access a portion of your death benefit early in order to pay for medical expenses or other costs associated with your illness.

Another one of the pluses of permanent life insurance is that it can offer life-long coverage. Your policy will be in force if you pay your premiums. You will have peace of mind knowing that you and your policy will offer a level benefit for the rest of your life.

One downside of permanent life insurance is that the premiums can be more expensive than other types of policies. Depending on your budget, there is an insurance product that may fit your needs.

Who could benefit from a permanent life insurance policy? Permanent life insurance is a good choice for people who want lifelong coverage and don't mind paying higher premiums, with the potential for dividends, interest and cash value depending on your policy’s structure.

Who might benefit from a term life insurance policy? Depending on health and other circumstances, term life insurance can provide a lot of coverage for very little. Term life insurance can be a great choice for younger families who are living on a tight budget but have a high amount of insurance need.

If you have questions about what type of life insurance is right for you, speak to an insurance professional. Be sure that they are explaining the differences in living benefits as well as showing you policies from different companies. As the consumer you deserve transparency and options.

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