What is Permanent Insurance?

Permanent insurance is simply put, life insurance for life.  It is slightly more expensive but here is why.  You pay a premuim which is greater than the actual cost of insurance.  The insurance company takes out the cost of insurance and puts the remainder in an interest bearing account.  As the cost of insurance goes up or in some cases where the cost is all paid up lets say as of age 65, the insurance company uses this surplus to continue to pay the cost of insurance.

The other part of this is what makes it an attractive vehicle for retirement savings.  The surplus in the insurance policy that you have paid can be used at any time tax free as either a return of premium or a low to no interest loan against the value that you do not have to qualify for.  The bonus is that it never loses money.  The stock market can fall and your account is not affected.  Your account gets interest as a fixed rate or a rate determined by an index like the S&P 500.

What are the different types of cash value insurance?

Whole life Insurance

• Premium is constant as is the cost of insurance
• Some carriers even share revenue through dividends
• Most policies can be paid up at age 65

Universal Life

• Payments can be flexible
• Cost of Insurance starts lower in the early years but goes up as you get older
• Cash builds up and can be used for what ever and when ever