How Does Permanent Life Insurance Work?

Permanent life insurance is designed to cover the entire life of the policyholder, unlike term life insurance, which will expire after a certain period. There are different types of permanent life insurance.

The way permanent life insurance works is determined by the premium you pay. The insurance company can allocate the premium in three different ways. The portion of the premium can be used for the death benefits or the cost of the life insurance. Another portion of the premium can go toward the administrative costs in order to manage the policy. The last portion of the premium goes toward cash value accumulation in the policy. Premiums can remain the same and be guaranteed for the life of the policy or could be more flexible.

The most common types of permanent insurance are whole, universal, and universal variable, and each one works a little differently. An agent at Silverton Insurance Specialist LLC can help you find the right one. Whole life insurance has different premium options. In ordinary whole life insurance, your premiums are the same as long as you live and your policy builds cash value. With limited payment whole life insurance, you pay the premium for a specific period but you still get insurance throughout your whole life. For this type, premiums are higher than if payments are spread out throughout the lifetime. Universal life insurance will allow you to vary your premiums and adjust your death benefit as the needs of your beneficiaries change. You will need to be in charge of how much is your account and when you need to make payments, in order to keep your policy active. Variable universal life insurance has your death benefit and cash value tied to a particular investment account. If your investments do well, then your benefits increase. However, if there is poor investment performance they would shrink.

Contact Silverton Insurance Specialist LLC to get a quote on life insurance.