Types of Permanent Life Insurance

Life insurance can be a tricky type of insurance to buy. There are two distinct types of life insurance – term life insurance and permanent life insurance – and life insurance is sold in two different ways with individual life insurance policies and group life insurance policies. Each way to buy life insurance comes with its own advantages and disadvantages.

Taking stock of all these options makes it clear buying life insurance requires some background research from you to determine what type of insurance best meets the needs of you and your family and then which is the best way for you to buy life insurance. Be sure to compare life insurance quotes to find the best deal when you are ready to buy life insurance.

To get you started on life insurance research, here’s an introduction to the types of permanent life insurance:

Permanent life insurance comes in four varieties – whole or ordinary life, universal or adjustable life, variable life and variable-universal life.

Whole or ordinary life insurance is the most common of the four varieties and features both a death benefit and a savings account. With whole life insurance you agree to regularly pay your premiums for a specified death benefit, and the savings aspect grows based on dividends paid to you by your life insurance provider.

Universal or adjustable life insurance provides you more flexibility than whole life insurance. You can increase your death benefit by passing a medical examination and the savings aspect usually earns a money market rate of interest. As your cash value account grows can change your premium payments to where the savings aspect of your life insurance policy covers your premiums.

Variable life insurance offers a death benefit and the savings aspect can be invested in stocks, bonds and money market mutual funds. You have a lot of control over savings, but because the money is being invested variable life insurance is higher risk than whole life or universal life insurance.

Variable-universal life insurance combines the features of variable life insurance and universal life insurance. Your savings can be invested as in variable life insurance and you can adjust your premium and death benefit a la universal life insurance.

Permanent life insurance is a good option because it provides lifelong life insurance protection. It pays a death benefit at any time and the savings aspect of permanent life insurance grows on a tax-deferred basis. Permanent life insurance premiums are usually higher than term life insurance, but they will never change regardless of your health or other factors.