The Radical Guide to Life Insurance: Permanent life insurance

Permanent life insurance

As its name suggests, permanent life insurance or “cash-value insurance” as it is often called provides coverage for the extent of your life as long as you continue to pay the policy premiums. If you die during the period that the policy is in effect, your beneficiary receives both a death benefit as well as the cash value portion of the policy. Permanent policy premiums are typically more expensive than other life insurance options though they remain relatively constant throughout the life of the policy regardless of your age or health.

Cash value policies are designed to be held for the life of the policy-holder. They are expected to provide enough income to cover premium payments when policy-holders are older and premiums are typically significantly more expensive. At the beginning of your policy, your premiums go largely toward paying the costs of the policy. As you get older, the cash value portion of the policy generates income that offsets the costs of the policy, and allows the premiums you pay to remain relatively constant even as mortality rates and costs increase.

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