What is Permanent Life Insurance?
Permanent life insurance is a type of life insurance that provides coverage for the policyholder's entire life. This type of insurance is also known as whole life insurance or universal life insurance.
Unlike term life insurance, which only provides coverage for a specified period, permanent life insurance remains in effect as long as the premiums are paid. This means that as long as the policyholder continues to pay the premiums, their loved ones will be protected by the policy.
One of the main benefits of permanent life insurance is that it can be used as a financial planning tool. This is because of a feature called Cash value. Permanent life insurance policies can serve as a savings tool. A portion of the premium payments made by the policyholder goes into this cash value, which accumulates over time. The cash value grows tax-deferred, meaning taxes on the earnings are postponed until the policyholder withdraws or borrows from it. Policyholders can access the cash value income tax-free through policy loans, using the funds for various purposes such as supplementing income, covering premiums, or addressing financial needs.
It adds a unique financial flexibility aspect to permanent life insurance, distinguishing it from term life insurance, which lacks a cash value component. The cash value can also contribute to the policy's overall value and may provide a source of money during the policyholder's lifetime. People use permanent life insurance to help save for retirement, pay off debts, or provide for their loved ones in the event of their death.
There are several types of permanent life insurance, including whole life insurance, universal life insurance, and variable universal life insurance. Each type has its unique features and benefits, so choosing the one that is right for you and your needs is important.
Overall, permanent life insurance is a great way to ensure that your loved ones are protected in the event of your death. It can also be used as a financial planning tool to help you save for the future and achieve your financial goals.
Feel welcome to contact us at www.aipsny.com/contact-us to learn more about our Life Capitalized system, and to get started with your Life Insurance Planning.
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Disclaimer: Information provided on permanent life insurance including policy loans and cash value withdrawals is for general purposes only and not financial advice. Pros include potential tax advantages, access to cash during emergencies, and flexibility. Cons involve possible interest accrual on loans, impacting death benefits, and surrender charges. Policyholders should carefully review terms, interest rates, and implications before considering these options. Individual circumstances vary, and professional financial advice is recommended. Policy loans and withdrawals may affect the policy's performance, and decisions should align with long-term financial goals. This disclaimer does not substitute for personalized advice, and readers are encouraged to consult with a qualified financial advisor to assess their specific situation and make informed decisions about permanent life insurance features.