RRA Educational Resources/Blog/Permanent Life Insurance Policies: A Tool You Didn’t Know Your Retirement Needed

Permanent Life Insurance Policies: A Tool You Didn’t Know Your Retirement Needed

Permanent life insurance is a type of life insurance that provides coverage for your entire life as long as premiums are paid. It also typically has a cash value component that grows over time and can be used to pay premiums, take out a loan, or provide income in retirement.

There are two main types of permanent life insurance: whole life and universal life.
1. Whole Life Insurance
Whole life insurance is the most basic type of permanent life insurance. It offers a guaranteed death benefit and cash value that grows at a fixed rate. The premiums for whole life insurance are typically level, meaning that they stay the same throughout the life of the policy.

2. Universal Life Insurance
Universal life insurance is a more flexible type of permanent life insurance. It offers a guaranteed death benefit, but the cash value can grow at a variable rate. The premiums for universal life insurance can also be variable, meaning that they can go up or down depending on the performance of the underlying investments.

In addition to whole life and universal life insurance, there are a few other types of permanent life insurance, including:

- Variable life insurance
: This type of insurance offers a death benefit and cash value that can grow at a variable rate. The cash value is invested in a variety of underlying investments, such as stocks, bonds, and mutual funds.

- Indexed universal life insurance: This type of insurance offers a death benefit and cash value that can grow at a rate that is linked to an index, such as the S&P 500. The cash value is not directly invested in the underlying index, but rather in a separate account that tracks the performance of the index.

- Guaranteed universal life insurance: This type of insurance offers a death benefit and cash value that is guaranteed not to go down. The premiums for guaranteed universal life insurance are typically higher than for other types of permanent life insurance.

Which type of permanent life insurance is right for you?
The best type of permanent life insurance for you will depend on your individual needs and circumstances. If you are looking for a guaranteed death benefit and a steady stream of income in retirement, then whole life insurance may be a good option for you. If you are looking for a more flexible policy with the potential for higher returns, then universal life insurance may be a better choice.

It is important to speak with a Retirement Risk Advisor to discuss your specific needs and goals before choosing a permanent life insurance policy!

Here are some of the benefits of permanent life insurance:

- Guaranteed death benefit
: Permanent life insurance provides a guaranteed death benefit, which means that your beneficiaries will receive a certain amount of money when you die, regardless of how long you live.

- Cash value: Permanent life insurance also has a cash value component, which is a savings account that grows over time. You can use the cash value to pay premiums, take out a loan, or provide income in retirement.

- Tax benefits: The cash value in a permanent life insurance policy grows tax deferred, which means that you do not have to pay taxes on the earnings until you withdraw them.

Here are some of the drawbacks of permanent life insurance:

- Cost
: Permanent life insurance is typically more expensive than term life insurance.

- Flexibility: Permanent life insurance policies are less flexible than term life insurance policies. Once you purchase a permanent life insurance policy, you are locked into the terms of the policy.

- Risk: There is always some risk associated with permanent life insurance. If the insurance company goes bankrupt, you may not receive the death benefit that you are entitled to.

​Ready to take action, to discuss your retirement and how a permanent life insurance policy could change your retirement for the better and protect you against the risks you will face in retirement? Learn everything you need to know about these risks and how you can overcome them with our FREE Masterclass!

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