How Much Permanent Life Insurance Coverage Do I Need?
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Permanent life insurance is a life insurance plan that protects you and your loved ones for an entire lifetime, rather than for a set period of years. In this article, we’re explaining how different permanent life insurance policies work and how you can calculate the dollar amount of coverage you need to protect your family and your finances.

What is permanent life insurance?

Permanent life insurance is the “umbrella” term for whole life and universal life, which are two types of life insurance with guaranteed coverage. Permanent life insurance means choosing a solution that stands by you no matter what, and it’s often a good solution for people who need coverage for an extended period of time, rather than a shorter period of time when they have dependents. 

How is permanent life insurance different from term life insurance?

The main difference between term life and permanent life insurance is that with a term policy, you “rent” your coverage for a 10, 15, 20, or 30-year term by making monthly payments to keep the policy active.

With permanent life insurance, your coverage stays intact until you pass away. You can also opt for additional benefits, known as riders, that offer perks such as payment flexibility and cash value savings.  

Universal vs. whole life insurance

Universal life insurance is the more affordable type of permanent life insurance that remains intact for a lifetime. Your monthly or annual premium payment depends on how much coverage you choose as well as your age and health at the time you apply. Universal life is popular for its affordability compared to other permanent life insurance options, as well as for its adjustable benefits and cash value component.

Whole life insurance is a slightly more expensive type of permanent life insurance that stays in force until you pass away. Your coverage amount is flexible and can range from an amount that’s necessary to cover your funeral expenses to a larger amount designated for your beneficiary. Whole life is often a good choice for people who want a guaranteed death benefit and a built-in cash value that can be used to fund children’s education or supplement retirement income.

Both options allow you to use a cash value component to make partial withdrawals, take out a loan or in some cases, make your monthly payments. If you don’t need life insurance anymore, you could surrender your policy and receive a sum of funds equivalent to the surrender cash value.  

How much permanent life insurance coverage do I need?

The amount of coverage you need will primarily depend on the type of permanent life insurance you choose. You’ll want to consider how many years you want to pay premiums – with universal life, you’ll pay premiums longer than you would with a whole life policy.

Another way to calculate how much permanent life insurance you need is to add up the following:   

  • Your estimated funeral costs (an average funeral and burial can cost almost $9,000)
  • Outstanding mortgage loans 
  • Outstanding debts (student loans, credit cards, auto loans)
  • Amount of income to be replaced if you pass away unexpectedly – this would provide for your spouse and children so they can continue their standard of living 
  • Cost of your children’s education if you choose to contribute towards it 

Adding up these expenses will give you an estimate on the dollar amount of coverage you need.

Your Quility insurance advisor can help you calculate this cost and fine tune your coverage to ensure your policy meets all of your needs. We make the process simple, so you don’t have to face these questions on your own.  

Get a plan in place today with support from a Quility insurance advisor

Quility offers universal life insurance and whole life insurance from more than 80 of the top life insurance companies in the industry. Our licensed insurance advisors stand ready to help you customize the right permanent life insurance plan for you and your family as well as check back in to help make policy adjustments as your needs change.

Ready to get a plan in place? Connect with a licensed agent today.

Let’s Get Started

Get a permanent life insurance policy that fits your needs with support from our trusted advisors.

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Calie Brummer
Head of Digital Communications
Calie Brummer is a staff writer and Head of Digital Communications at Quility Insurance with a focus on financial well-being and life insurance solutions.