Permanant and Whole life Insurance
There are a number of different kinds of permanent insurance products available in today's marketplace but in its simplest form, permanent insurance is designed to provide permanent life-long insurance protection. Permanent insurance is considered by many people to be the most secure form of insurance to protect against financial loss due to death. In most cases we expect to live a long healthy life and die in our later years. However if we all waited to purchase insurance until we expected to die, the cost of the insurance would defeat the purpose of buying it. Therefore, many permanent insurance policies are priced with level premiums so the cost of the insurance is kept at an affordable level throughout the lifetime of the insured.
As you pay your premiums, many permanent life insurance policies, with the exception of some T100 policies, build up a cash reserve within the policy. This is a form of savings and can be accessed for emergencies. However, since the cash value makes up part of the death benefit – thereby helping the insurance company to keep premiums level even in your later years – accessing the cash value of a policy may reduce the death benefit.
In addition to level premiums and a permanent death benefit, many permanent plans are "participating" meaning the insurance company will usually pay you dividends on your whole life insurance policy. These dividends are paid to you to refund the portion of your premium payments in excess of the company's actual costs, taking into consideration actual investment earnings, expenses, termination rates and mortality.
Over the years, variations on the theme of permanent (sometimes called whole life) insurance have been developed to give consumers a number of options when it comes to permanent insurance. These include: Universal Life insurance, and Term to age 100. These products all offer permanent insurance protection with various payment options.