Permanent Life Insurance is a term used to describe a life insurance policy that doesn’t expire. This is where the name permanent comes from. The most common type of permanent life insurance is called whole life insurance. Another name for permanent life insurance is universal life insurance. Whole life insurance like permanent life insurance lasts your WHOLE life and doesn’t cancel.
Whole life insurance and universal life insurance policies both have a savings account feature called cash value where funds can accumulate over time. This savings account can be used to borrow against if needed once the cash value account has been built up. Buyers shouldn’t expect to be able to use this feature until many years have gone by as the cash value takes a long time to accumulate.
Permanent life insurance plans have become popular over the years since these plans are easy to understand and simple to qualify for. If you have a permanent life insurance policy in place when you die, it pays your beneficiary a death benefit just like a life insurance policy should. It’s that simple! Most individuals who purchase a permanent life insurance policy are looking for lifelong insurance protection to cover their families.
Its important to know what your family financial goals are to determine if permanent life insurance makes sense for you or not. Term Life Insurance might make more sense if you have short term financial goals. Many families benefit from a combination of term insurance and permanent life insurance because the term insurance protects against short term interests and the permanent life insurance gives peace of mind that final expense needs are covered for a lifetime. Let’s take look at Term vs Permanent life insurance and see how they differ.
Term vs Permanent Life Insurance
Term life insurance is type of life insurance policy that is temporary and does expire. Term life policies provide coverage for a certain time period. Most term life insurance companies offer policies available for 10, 20, and 30-year terms. Of course, as you become older you might not qualify for the longer time frame plans due to your age. Term life insurance policies are easy to understand and are often less expensive than other life insurance products. Term life policies will always cost less than a permanent life insurance policy because the term policy only covers you for a set period of time. Term life insurance is often called pure life insurance since you are ONLY buying life insurance and it doesn’t build cash value. Here some are highlights comparing term vs permanent life insurance:
Term Life Insurance:
- Temporary Coverage
- Less expensive to buy
- Great for young couples
- Easy to understand
- Doesn’t build cash value
- Options to purchase without a medical exam
- Some can be converted to permanent life insurance
Permanent Life Insurance:
- Lifetime protection
- Policies can’t be cancelled due to age or health
- Policies build cash value
- Some permanent policies don’t require a medical exam
- More expensive than term life insurance
What is Simplified Issue Whole Life Insurance?
One type of permanent insurance that we will discuss is simplified issue whole life insurance. Simplified issue whole life insurance is best described as a whole life insurance policy that doesn’t require a medical exam. Once again, simplified issue plans only require health questions on life insurance applications and don’t require a medical exam. Simplified issue whole life insurance plans are also referred to as burial insurance, funeral insurance, and final expense insurance. Simplified issue whole life insurance is a great option for those needing life insurance protection for a lifetime. You can even buy this type of policy in your 80’s.
Most simplified issue whole life insurance policies have lower face amounts ranging from $5,000 to $50,000. These policies are perfect for those seniors who are ONLY wanting a life insurance policy to cover their final expenses at the time of their passing. These final expenses often include funeral expenses, medical bills, credit card bills and any other remaining expenses you may have. The application process on simplified issue whole life insurance policies is super easy and often most seniors are approved instantly or within 24 hours. You simply choose the amount of life insurance needed to cover your final expenses and then your beneficiary will be awarded the death benefit when you die. Just like other permanent life insurance plans, simplified issue whole life also builds cash value. However, these types of policies take years before building a real amounts of cash value. Here are some benefits of simplified issue whole life insurance:
- Policy lasts your WHOLE life
- Easy application and approval process
- Monthly premium NEVER increases
- Death benefits are usually tax-free
- No medical exams are required
What is Guaranteed Issue Whole Life Insurance?
Another type of permanent life insurance policy that is available for individuals with severe health issues is called guaranteed issue whole life insurance. Guaranteed Issue life insurance policies don’t require medical exams or even ask any health questions. Your acceptance is GUARANTEED. That’s why guaranteed issue policies are also called guaranteed acceptance life insurance. Once again, these policies are perfect for those who can’t get approved for traditional life insurance. So, if you have been turned down before no worries, Assurance Life has you covered.
Guaranteed issue life insurance policies are usually available for ages 50-85 years old and coverages range from $5,000 to $25,000. Since no medical underwriting is done on these policies, the application is the simplest of all life insurance applications and the approval process takes about 10 minutes start to finish. No medical exam or health questions and everyone is APPROVED. So, what’s the catch? Well, since life insurance companies don’t ask any health questions or do a medical exam, these policies are more expensive than other types of life insurance. However, still very affordable and easy to budget for. Another important thing to know about Guaranteed issue life insurance policies is they ALL are graded benefit life insurance plans.
Having a graded death benefit life insurance policy means you will have a waiting period before the insurance company will pay your death benefit. Most guaranteed issue companies on these types of plans require a two-year waiting period. This means if you die within two years of taking out your policy, the life insurance company would only pay you all your money back plus 10 percent interest. After two years, the entire death benefit would be paid out.
Two of our favorite companies that we use for guaranteed issue whole life insurance policies are AIG Life Insurance and Gerber Life Insurance. Both have companies have great guaranteed issue life insurance plans and the best rates in the industry.
If you would like instant quotes from AIG or Gerber Life Insurance companies, click the Get Quotes Now button on the left of the page to get started. Assurance Life has access to over 25 of the nation’s best life insurance companies and can always find the lowest priced policy possible. If you are needing a permanent life insurance quote, rest assured we’ve got you covered.