Posted on: 7 June 2018
Permanent, or whole-life, is one of the two major types of life insurance (the other is term life insurance, which only insures your life for a fixed amount of time). Technically, some permanent insurance policies only last until you turn 100, so if you're planning on having an extra-long life, be sure to choose one that lasts beyond 100.
However, many young professionals and families are left wondering if they really need whole-life insurance or if the more affordable term life insurance is their best bet. Here are three signs that you should choose permanent.
1. You want it to double as an investment
Term life insurance just insures you until the term expires, and you don't get anything back from it at the end. With permanent life insurance, you put a lot more money in, but you can also get money back. Not only does your account build value that you can then cash in later if you're in a tight spot, but the company may also pay you interest on the money building up in your policy.
Since a life insurance policy isn't the highest-return investment out there, it's not recommended for someone who doesn't already have considerable savings tucked away. But if you do (for example, if you've maxed out your retirement account) and want to keep investing, this can be a great option.
2. You need it to pay estate taxes
Term life insurance can cover end-of-life costs if anything happens to you during its term. However, keeping yourself covered with term life insurance as you age is tricky because it becomes more expensive and eventually it can become harder to find a company that will take you on, since the risk of death increases with advancing age.
If you've built up a considerable amount of wealth over the past few decades, you'll want to have enough life insurance coverage to take care of estate taxes as well as the other typical end-of-life costs. And choosing whole-life insurance is a better bet than trying to keep yourself covered with term insurance.
3. You're planning on having dependents indefinitely
Whether you're the primary caregiver for a sibling or child with special needs or whether you're planning to adopt a baby as soon as you find yourself with an empty nest, constantly having dependents who need you for financial security is another great argument in favor of whole life insurance.
Term life insurance is often sold to parents as being adequate coverage to ensure their family will be financially stable until the children grow up and become independent. But if you're planning on having dependents living with you for pretty much the rest of your life, permanent life insurance makes a lot of sense.
These three signs can help you determine if you need to buy permanent life insurance rather than settling for the more affordable term life insurance. To learn more, contact an insurance agent like Jack Brier.Share