What is Permanent Life Insurance

Glossary - Letter - P

What is Permanent Life Insurance? Permanent life insurance provides lifetime coverage, unlike term life insurance which is in place for a particular, pre-defined period of time. Permanent insurance has both an insurance and an investment component.
Here are three most frequent types of permanent life insurance with more explanations:

1. Whole life insurance: It is a type of a permanent life insurance that covers you as long as you live. Typically, you will be paying constantly higher premiums since in the early years of your policy it should accumulate enough value to off-set later higher insurance risk. Your premiums will not change throughout your life. You can also terminate the policy (also called surrender) if you want and get back part of accumulated funds, or you can sometimes borrow money against your policy cash value.

2. Universal life insurance: It is another type of permanent life insurance. It is quite similar to whole life insurance in that it stays in place until you die or decide to terminate (surrender) the policy. The difference is that you can choose the amount of premiums that are paid into the cash accumulation part of your policy.

3. Term 100:  Despite its name, this is another type of permanent insurance, since it stays in place for your whole life. . The difference is that there is no cash value accumulated through this policy, and thus it can have lower premiums than whole or universal life insurance.