Permanent life insurance offers lifetime coverage, ensuring your beneficiaries receive a guaranteed death benefit no matter when you pass away. It’s a dependable way to secure long-term financial protection.
Is Permanent Life Insurance Right for You?
Is Permanent Life Insurance Right for You?
Permanent life insurance is designed to offer lifelong protection, making it a strong choice for individuals who want coverage that won’t expire as they age. Unlike term life insurance, which provides coverage for a limited period, permanent life insurance guarantees a generally tax-free death benefit that remains in place for your entire life — as long as premiums are paid. While it typically comes with higher premiums, those costs reflect the long-term stability and added value the policy provides.
Premiums are often level and fixed, meaning they won’t increase as you get older, and there’s no need to re-qualify or undergo additional health screenings later in life. In addition to the death benefit, permanent policies build tax-deferred cash value over time, which you can borrow against or withdraw if needed. This combination of protection, predictability, and financial flexibility makes permanent life insurance a valuable tool for long-term planning, especially if you’re looking to leave a legacy, supplement retirement income, or ensure ongoing support for dependents.
Permanent life insurance is designed to offer lifelong protection, making it a strong choice for individuals who want coverage that won’t expire as they age. Unlike term life insurance, which provides coverage for a limited period, permanent life insurance guarantees a generally tax-free death benefit that remains in place for your entire life — as long as premiums are paid. While it typically comes with higher premiums, those costs reflect the long-term stability and added value the policy provides.
Premiums are often level and fixed, meaning they won’t increase as you get older, and there’s no need to re-qualify or undergo additional health screenings later in life. In addition to the death benefit, permanent policies build tax-deferred cash value over time, which you can borrow against or withdraw if needed. This combination of protection, predictability, and financial flexibility makes permanent life insurance a valuable tool for long-term planning, especially if you’re looking to leave a legacy, supplement retirement income, or ensure ongoing support for dependents.
Three Types of Permanent Life Insurance
Whole Life Insurance
Whole Life Universe is often considered the gold standard, whole life provides fixed premiums, guaranteed lifelong coverage, and strong cash value growth. You can access your cash value anytime, and the policy can be paid over your lifetime or a limited period. For long-term stability, it’s hard to beat.
Universal Life Insurance
Universal Life offers permanent coverage with flexible premiums and adjustable death benefits. It’s usually more affordable than whole life and also builds cash value, though typically at a slower rate.
Survivorship Life Insurance
Survivorship Life Insurance (Second-to-Die) insures two people and pays the death benefit after the second person passes. It’s ideal for estate planning, funding trusts, or covering estate taxes — especially for couples. It’s also more affordable than buying two separate policies.
Permanent life insurance is a smart choice if you want guaranteed lifelong protection, potential cash value, and peace of mind knowing your family will be taken care of — no matter what.
How Permanent Life Insurance Works
Permanent life insurance provides coverage that lasts for your entire lifetime, as long as the required premiums are paid. Unlike term life insurance, which only covers you for a set period, permanent life insurance guarantees a death benefit no matter when you pass away. A portion of each premium goes toward the cost of insurance, while the rest contributes to a cash value account that grows over time. Depending on the type of permanent policy — such as whole life, universal life (UL), indexed universal life (IUL), or variable universal life (VUL) — cash value may grow at a fixed interest rate, according to market indexes, or through investment subaccounts. This accumulation makes permanent policies not only a protection tool but also a long-term financial asset.
One of the key features of permanent life insurance is the ability to access the policy’s cash value. Policyholders can take out loans or withdrawals to help cover major expenses like education, home purchases, emergencies, or retirement needs. These loans are typically tax-advantaged, and the policy continues to grow as long as it’s properly funded. Some permanent policies also offer flexibility with premiums and death benefits, especially universal life options, which allow adjustments as your financial situation changes. With lifelong coverage, cash value growth, and customization options, permanent life insurance works as a combined solution for protection, savings, and long-term planning.
Cash Value Explained
Cash value is a unique savings component built into many types of permanent life insurance, including whole life, universal life, indexed universal life, and variable universal life. As you pay your premiums, a portion goes toward the cost of insurance while another portion is deposited into a tax-advantaged cash value account. This money grows over time — either at a guaranteed interest rate, through market-indexed crediting, or through investment subaccounts, depending on the type of policy you have. Cash value accumulation makes permanent life insurance more than just a death benefit; it becomes a long-term financial asset that increases year after year as the policy matures.
One of the biggest advantages of cash value is the ability to access it during your lifetime. Policyholders can take loans or withdrawals from their cash value to help fund major life expenses such as college tuition, home improvements, emergencies, or supplementing retirement income. Loans are typically tax-advantaged and do not require credit checks or approvals, giving you financial flexibility when you need it most. However, any outstanding loan balances or withdrawals may reduce the policy’s death benefit if not repaid. When used correctly, cash value serves as a powerful financial tool — offering liquidity, tax benefits, and a cushion of long-term stability that grows alongside your policy.
Advantages of Permanent Life Insurance
| Advantages | Why It Helps |
|---|---|
| Lifetime Protection | Provides long-term coverage that remains in effect for your entire life, not just for a set period. |
| Cash Value Growth | Accumulates cash value that you can use or borrow from later, depending on policy rules. |
| Stable, Level Premiums (Whole Life) | Predictable premiums that stay the same help simplify budgeting over the long run. |
| Flexible Premium & Benefit Options (Some UL Policies) | Certain universal life policies allow adjustments to premium payments or death benefit amounts within policy guidelines. |
| Policy Guarantees | Whole life guarantees, and some no-lapse UL guarantees, can help ensure coverage stays active when requirements are met. |
| Tax-Deferred Accumulation | Cash value typically grows on a tax-deferred basis, and beneficiaries generally receive a tax-free death benefit. |
| Optional Policy Riders | Add-ons such as chronic illness coverage, accelerated death benefit, or waiver of premium can personalize and enhance the policy. |
Disadvantages of Permanent Life Insurance
| Potential Drawback | What to Look For |
|---|---|
| Higher cost than term | You’ll pay more for lifelong protection and the policy’s cash value feature compared with term insurance. |
| Complexity | Permanent policy types (whole life, universal life, indexed UL, variable UL) can be complicated—review fees, guarantees, and assumptions closely. |
| Early surrender charges | Canceling the policy or taking out funds in the early years can trigger surrender fees and reduce the policy’s overall value. |
| Performance risk | Indexed and variable policies are tied to market performance and formulas, so returns—and cash value—can fluctuate with markets and expenses. |
| Discipline needed for funding | Underfunding premiums or relying heavily on policy loans can drain cash value and increase the chance the policy will lapse. |
| MEC risk when overfunded | Paying too much into a policy can cause it to become a Modified Endowment Contract (MEC), which may change how withdrawals and loans are taxed. |
| Loans can diminish benefits | Policy loans accrue interest; if they’re not repaid, they can reduce both cash value and the death benefit. |
Permanent Life Insurance Quote
Call AccuQuote today at (800) 442-9899 or complete our Permanent Life Insurance calculator and we’ll help you figure out what kind of policy makes the most sense for your needs.
Permanent Life Insurance: FAQs
What is permanent life insurance and how does it work?
Permanent life insurance provides lifelong coverage and includes a cash value component that grows over time. As long as premiums are paid, the policy never expires. When you pass away, your beneficiaries receive a guaranteed death benefit, and you may also access the policy’s cash value during your lifetime.
How is permanent life insurance different from term life insurance?
Permanent life insurance lasts your entire lifetime and builds cash value, whereas term life covers you for a set number of years and does not accumulate savings. Permanent policies are more expensive but offer lifelong protection and long-term financial benefits that term policies do not.
Does permanent life insurance build cash value?
Yes. A portion of each premium goes into a cash value account that grows tax-deferred. Depending on the policy type, growth may be guaranteed, tied to market performance, or based on dividends. You can use this cash value for emergencies, retirement income, or other financial needs.
What are the benefits of permanent life insurance?
Permanent life insurance offers unique advantages, including:
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Lifetime protection
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Cash value accumulation
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Tax-deferred growth
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Potential tax-free policy loans
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Estate planning benefits
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Predictable or flexible premiums, depending on policy type
It can serve as both a protection tool and a long-term financial asset.
Is permanent life insurance a good investment?
Permanent life insurance is not a traditional investment, but it can be a valuable long-term financial tool. It offers stable growth, tax advantages, and lifetime coverage. It may be a good fit for people looking to diversify assets, protect wealth, or leave a legacy, but returns are generally lower than market-based investments.
Can I borrow against the cash value in my permanent life insurance policy?
Yes. You can take out policy loans using your cash value as collateral. These loans usually have favorable interest rates and require no credit checks. However, unpaid loans will reduce your policy’s death benefit and cash value.
Who should consider permanent life insurance?
Permanent life insurance may be ideal for individuals who:
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Want lifetime coverage
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Need estate planning solutions
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Want to build tax-advantaged savings
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Have long-term financial responsibilities
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Prefer guaranteed growth or stable returns
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Want to leave an inheritance
It is often used by high-income earners, business owners, and families planning generational wealth.
Can I change my premiums or death benefit on a permanent policy?
It depends on the type of policy:
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Whole Life: Premiums and benefits are typically fixed.
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Universal Life: You can adjust premiums and death benefits—within certain limits.
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Indexed and Variable UL: Also allow flexibility but depend partly on market performance.
Your policy type determines how much control you have.
Can I convert term life insurance into permanent life insurance?
Yes. Many term life policies include a conversion option that allows you to upgrade to a permanent policy—without taking another medical exam. This is especially valuable if your health has changed since you first purchased coverage.
Is it possible to have both permanent and term life insurance?
Absolutely. Many people combine both policy types for a balanced strategy. A term policy provides affordable, high-coverage protection for immediate needs, while a permanent policy builds cash value and guarantees lifelong coverage.
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