Permanent Life Insurance

A permanent life insurance policy will have fixed and regular payments, and will pay on the death of the policy holder the death benefit. It is generally more expensive than term life insurance as this policy will allow the policy holder to access some of the funds that they have invested in to the life insurance policy.

The life insurance policy will be taken out over a period of time or until the death of the policy holder and as long as the payments are kept up with there will be an assured sum at the end. Permanent life insurance works in a similar way to an endowment which has a maturity date. In the early years the premiums paid into the life insurance policy out way the average cost of the payouts and claims, this means that there is excess capital to invest. The policy holder can then in later years access these invested funds as part of the surrender value. Due to this it means that the life insurance policy has an investment component and this is why it is generally more expensive compared to a term life insurance policy. There are three main types of permanent life insurance, whole, universal and variable.