is a type of life insurance that provides lifetime coverage as long as you continue to pay premiums.
Unlike term life insurance, which expires after a set period (like 10, 20, or 30 years), permanent life insurance is designed to last for your entire life, offering both a death benefit to your beneficiaries and the potential for building cash value.
There are different types of permanent life insurance policies, non-participating, participating and Universal. participating and universal life being two of the most common. Below is a breakdown of each.
Participating life insurance (often called whole life insurance) is a type of permanent life insurance that offers fixed premiums, a guaranteed death benefit, and the potential for dividends. Here’s a breakdown of how it works:
Key Features:
Why to choose participating life insurance coverage:
Universal Life Insurance (UL) is another type of permanent life insurance that offers flexibility in terms of premiums and death benefits. Unlike whole life, which has fixed premiums, universal life insurance allows for changes in both.
Key Features:
Subtypes of Universal Life Insurance:
Summary Comparison:
Feature | Participating Life Insurance (Whole Life) | Universal Life Insurance |
Premiums | Fixed, predictable | Flexible (can change over time) |
Death Benefit | Guaranteed, fixed | Flexible, can be adjusted |
Cash Value Growth | Accumulates at a guaranteed rate | Accumulates based on interest or investment returns |
Dividends | Potential for dividends (not guaranteed) | No dividends |
Flexibility | Low (fixed premiums, fixed death benefit) | High (adjust premiums and death benefit) |
Cost | Higher premiums | Can be lower, but can increase with age or cost of insurance |
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