What is the Average Cost of Permanent Life Insurance?

iQuanti: Cost can be a deterrent that keeps people from buying a life insurance policy. But the benefits of permanent life insurance may outweigh the price. If you’re in the market for a permanent life insurance policy, here’s what you need to know about the average cost of getting a plan for you and your loved ones.
What is permanent life insurance?
Permanent life insurance is a type of plan that lasts for the policyholder’s lifetime, unlike a term policy that expires after a set number of years. Whole life and universal life are the two types of policies that are classified as permanent life insurance. And the differentiating factors for permanent life are that these policies offer cash value plus a death benefit.
How does permanent life insurance work?
With a permanent life insurance policy, you may only need to pay premiums until you reach a certain age or for a specific number of years after you purchase it. However, since permanent life insurance policies can accrue cash value, this means they can also be more expensive than a term policy.
Cash value in a permanent life insurance policy provides a flexible, tax-deferred savings vehicle, which can make the policy more valuable than term life insurance. The cash value can be used in several ways, such as making a tax-sheltered investment, passing a legacy to heirs, or paying policy premiums down the line. That means the cash value component can be accessed while you’re alive or passed on as a legacy when you’re gone.
Types of permanent life insurance
There are two main types of permanent life insurance, whole life, and universal life:
What determines the cost of permanent life insurance?
Several factors can change the price of a permanent life insurance policy, including:
The price you’ll pay for a permanent policy can vary based on any of these factors. Generally, policies cost less for younger females in excellent health.
Is permanent life insurance right for me?
Here are several instances when a permanent life insurance policy might be a good fit:
The bottom line
Permanent life insurance can be a more costly option than term life insurance, but the cash value component and lifetime coverage can make it worth the cost. Plus, policies may cost less for those who are younger and healthy. That means if you’re looking to lock in a great rate on a life insurance policy that’s for life, a permanent life insurance policy is worth considering.
Source: iQuanti, Inc.