What is Unique About Permanent Life Insurance?

Permanent life insurance is a life insurance policy designed to provide protection for the insured’s entire life, typically up to 121 years of age. Contrast permanent life insurance with term insurance, which provides protection only for a limited time. In addition to paying a death benefit, permanent life policies are designed to create living benefits such as cash value—which grows tax-deferred and can be accessed with no taxes due, under current tax law.

Varieties of permanent life insurance include whole life, universal life, indexed universal life, variable life, and combinations of those.

Permanent Insurance vs. Term Insurance—Which Is Best?

Of course, the obvious purpose of life insurance is to provide a financial resource to the family of the person who is insured, when that person dies.

But the right kind of life insurance—permanent or cash value life insurance, not term insurance—can also be a flexible and powerful cash-accumulating, wealth-building tool for dealing with financial challenges. And nobody needs to die for these financial resources to become available.

As you consider the purchase of life insurance, don’t have tunnel vision! The flexibility of a permanent policy compared to a term policy is something like the flexibility of your smartphone compared to your grandmother’s landline. One runs circles around the other, doesn’t it?

You may have read about permanent life insurance on other sites, like the Infinite Banking Concept or Paradigm Life websites. Let’s take a closer look at permanent life insurance.

Permanent life insurance will remain in force until you die, as long as any scheduled premiums are paid. For this reason, a permanent life insurance policy may be preferred over a term policy, if you can reasonably expect to need its death benefit—or its living benefits—later in life.

By the way, “lifetime coverage” does not necessarily mean “lifetime premiums”! Some permanent policies are written so that premiums stop after 10 years or less, or at age 65.

Cash value—a living benefit of permanent life insurance

Permanent insurance is life insurance plus a tax-advantaged savings component which allows you to grow your wealth tax-deferred. This savings component, called your “cash value” in insurance language, is one of a life insurance policy’s living benefits.

You can usually access your cash value on a tax-free basis, using a simple strategy of dividend withdrawals and loans against the cash value of your policy, under current tax law.

Depending on circumstances, life insurance policy loans may not need to be paid back. If you die with a policy loan outstanding, the death benefit to be paid will be reduced by the amount of the outstanding balance, and no taxes will be due on either the now-paid-off loan or the death benefit.

There are other uses of a permanent life insurance policy’s cash value:

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One major use of a permanent life insurance policy is to transfer wealth to beneficiaries. Because life insurance benefits are paid income tax-free, large sums can be transferred as the life insurance death benefit upon the death of the insured—without incurring taxes.

Also, cash transferred as a life insurance policy death benefit bypasses probate, thereby lowering costs and helping to insure privacy.

How to buy a permanent life insurance policy

Permanent life insurance comes with many ways to customize a policy and make it exactly right for you, which means you’ll have some decisions to make. A professional life insurance advisor can help you review your options and will make recommendations for your situation, based on his or her years of experience. A good advisor will give you information, but will not try to push you toward a predetermined choice.

Here are the four simple steps to getting the whole life insurance policy that will best suit the financial goals and needs of your family. …

Step 1: Decide if you’d like to learn more about dividend-paying high early cash value whole life insurance

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Decide if a dividend-paying high early cash value whole life insurance policy that builds cash more quickly is something you want to learn more about. If you are interested in accessing the cash value of your policy as we talked about earlier, you may want a policy that funnels more of your premium dollars toward building cash value, and slightly fewer dollars toward building your death benefit.

Your out-of-pocket cost doesn’t necessarily change with a high early cash value life insurance policy, and you actually get more bang for your buck, because the riders Bank On Yourself Authorized Advisors add to a policy build cash value with great efficiency.

Here’s why: Bank On Yourself Authorized Advisors typically design policies with Paid-Up Additions Riders (see Step 4) as one way to boost the policies’ cash value growth.

Well over 90% of every Paid-Up Additions Rider premium dollar goes directly to building cash value. Very little goes to the cost of the death benefit, and only a minuscule amount goes to the advisor as a commission.

Because more of your premium dollar is funneled into building cash value and less is funneled to your advisor in the form of commission, you’re building cash value more efficiently.

If the financial advisor or insurance agent you’ve been working with can’t explain this to you, they don’t understand the concept—and it’s costing you money!

Step 2: Select the right advisor to help you with your life insurance needs

You want to work with an experienced life insurance advisor who has the advanced training necessary to understand all the ramifications of life insurance with living benefits—particularly high early cash value life insurance.

Be careful who you work with! If your advisor hasn’t been specially trained, you don’t want their help with this! If your present advisor tells you he already understands all the important details necessary to design the high early cash value policy you’re interested in, you may want to ask him, “If you could have offered me this before, why didn’t you?”

If your financial advisor doesn’t structure your policy properly or uses the wrong company or product, your plan could grow much more slowly, and you could lose the tax advantages. Is it worth taking that chance just so you can work with the same non-specialist you’ve worked with in the past?

Bank On Yourself Authorized Advisors have been specifically trained to understand the intricacies of permanent high early cash value life insurance, and they are committed to helping you achieve your life insurance goals.

Step 3: Determine how much life insurance you need

Your advisor can help you determine how much insurance you will need. He or she can also help you find ways to build a bridge between what you may realize you need and what you feel you can afford.

Step 4: Consider riders to enhance and customize your life insurance policy

Chose among the riders (“add-ons”) offered. What riders do you need, if any? One rider provides an early payout in the case of terminal illness. Another rider pays your premiums for you if you become disabled.

A term rider will add some term insurance coverage to your permanent policy, and a Paid-Up Additions Rider lets you build cash value most efficiently while also increasing your death benefit with optional paid-up addition rider premium payments.

Both a term rider and a Paid-Up Addition Rider, added to a whole life insurance policy in the right proportions, are typically used by Bank On Yourself Authorized Advisors to design an extremely efficient and hard-working high early cash value life insurance policy.

In fact, a properly-designed whole life insurance policy will ultimately have the most cash value and the largest death benefit.

(Request a FREE Analysis here to get a referral to an Advisor with the training to structure your plan for the most efficient growth.)

The Case for Dividend-Paying Whole Life Insurance as the Basis for Your High Early Cash Value Life Insurance Strategy

There are several types of permanent insurance, and they are not all created equal. The types of permanent life insurance from which you’ll choose are whole life, universal life, indexed universal life, and variable life insurance.

While virtually all permanent life insurance policies are designed to build cash value, only whole life insurance policies are guaranteed to build cash value.

As a rule of thumb, variable life insurance is considered to be the most risky, because both your death benefit and your cash value are dependent on the performance of the equities market. While the market goes up in some years, it goes down in others, and that can result in the collapse of your insurance policy.

Universal life and indexed universal life carry the very real risk that, depending on the performance of securities markets and market indexes, your premiums may increase beyond your ability to pay, and your cash value could be entirely used up trying to keep your policy afloat. And if you compare universal life insurance to whole life, you can see even more of the benefits whole life has to offer.

Whole life has more guarantees than any other form of life insurance

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Your premiums are guaranteed to never go up, and your death benefit and cash value are guaranteed to never go down!

A high early cash value life insurance policy designed the Bank On Yourself way gives you the guarantees, flexibility, and advantages of a whole life policy, including living benefits and a cash account—your cash value—that is guaranteed to grow tax-deferred.

You won’t pay any income tax on your gains. You can use your cash value as a source of highly flexible, low interest financing.

You can also use your cash value to supplement your retirement income, without owing income tax on that supplemental income.

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Choosing and customizing a life insurance policy to fit your needs is more like finding the perfect smartphone than it is like calling the phone company and telling them you want a land line. But, oh, the benefits!

You will best be served by consulting with a professional advisor who is trained in all aspects of life insurance (including high early cash value insurance) and who has had several years of in-the-field experience.

Bank On Yourself Authorized Advisors are a select group of experienced life insurance professionals who have undergone significant additional training and continuing education. Bank On Yourself is available anywhere in the United States and Canada.

One of these advisors would be happy to look at your overall financial picture to find creative ways you can take advantage of the guarantees and tax advantages of the Bank On Yourself strategy of high early cash value dividend-paying whole life insurance from any one of several reputable life insurance companies that have been in business for a century or more.

When you request a FREE Analysis, you’ll get a referral to one of only 200 financial advisors in the US and Canada who have met the rigorous training and requirements to be Bank On Yourself Authorized Advisors.

You’ll find your advisor to be knowledgeable, courteous, and extremely helpful in assisting you with everything related to life insurance, from calculating how much you’ll need, to the type of policy, to how to find the money to pay for it.

Don’t procrastinate! Request your FREE Analysis here now, while it’s fresh in your mind!

To find answers to many of your life insurance questions, browse through our easy-to-read No-Nonsense Guide to Life Insurance, prepared for you by Bank On Yourself.