Glossary > Insurance > Life Insurance > General

Permanent Life Insurance

Permanent life insurance is a type of life insurance that provides coverage for the entire lifetime of the insured individual, as long as premiums are paid. It builds cash value over time and offers a death benefit to the beneficiary upon the insured person's death.

Example #1

For instance, if a person purchases a permanent life insurance policy at a young age, they can enjoy coverage for the rest of their life, regardless of health changes.

Example #2

Another example is if the insured individual passes away, the policy would pay out a death benefit to the designated beneficiary.

Misuse

A misuse of permanent life insurance could be when insurance agents aggressively sell expensive policies to individuals who may not need such extensive coverage. It's crucial to protect against this by ensuring that policyholders understand the terms, benefits, and potential drawbacks of permanent life insurance before making a purchase.

Benefits

One significant benefit of permanent life insurance is the cash value accumulation. This can serve as a savings or investment component, providing a source of funds that policyholders can access during their lifetime.

Conclusion

Permanent life insurance offers lifelong coverage, builds cash value, and provides a death benefit, making it a valuable financial planning tool. However, it's essential for consumers to carefully consider their needs and options before committing to a policy to avoid potential misuse of this type of insurance.

Related Terms

Life InsuranceCash ValueDeath Benefit