Permanent Life Insurance 101
older man and woman sitting on couch using tablet to buy life insurance online

Permanent life insurance offers many unique benefits and lifetime peace of mind, making this policy a popular choice for individuals who want to build savings and financially protect their loved ones.

Known for its cash value savings, level premiums, and customizable coverage, permanent life insurance is a solution that will stand by you no matter what.

Types of permanent life insurance

Whole life and universal life insurance are two popular types of permanent life insurance. Both offer lifetime coverage, however, there are two key differences between these policies: the number of years you pay premiums – with universal life requiring a longer pay period than whole life – and how you can use your cash value component.

Whole life insurance

Whole life insurance stays in force until you pass away, rather than covering an average lifespan. You can choose a coverage amount that fits your needs, whether you only want to cover final expenses or provide long-term financial support for a beneficiary. Whole life offers a guaranteed death benefit, fixed premiums for the lifetime of the policy, and a built-in cash savings component that slowly accumulates over the years. This policy is generally more expensive than a universal life insurance policy.

Universal life insurance

Universal life insurance is an affordable permanent life insurance policy with coverage that lasts a lifetime, usually past age 90. Universal life includes a cash value component that accumulates throughout the entire life of the policy and can be used to supplement income and pay expenses. The cash value savings component of a universal life policy is savvier than whole life; as the policyholder, you can overpay the monthly premium to build a tax-deferred savings for future use. Even more, if you miss a payment, the cash value can step in and keep your policy active.

You can also make changes to your policy periodically as your needs change, making universal life one of the most flexible types of life insurance available.

How much does permanent life insurance cost?

When it comes to any type of life insurance, your health and age at the time you apply for coverage will affect your premium price. Due to its cash value component, permanent life insurance is generally more expensive than term life and mortgage protection insurance. You are essentially paying for lifelong coverage rather than “renting” a term of coverage, and with that purchase, you will gain access to tax-advantaged cash value right within your policy.

Is permanent life insurance right for you?

Permanent life insurance is generally a good fit for individuals who know that they will need coverage for their entire life. If you have financial dependents or would like to leave behind a death benefit to support a loved one after you’re gone, a permanent life insurance policy would provide the comprehensive and guaranteed coverage you need. Even more, the policy’s cash value component would allow you to grow tax-advantaged savings over the years, which is not achievable with a term life policy.

Benefits of a cash value savings component

Many individuals use the interest-earning cash value component of their permanent life insurance policy to save for retirement. Each month, a portion of your premium payment goes towards a savings account within your policy. This cash value grows tax-deferred throughout the lifetime of your policy, so long as you keep your coverage in force by paying premiums on time. The only catch with cash value is that withdrawing funds can affect the amount of the death benefit.

Converting term to permanent life insurance

If you currently have a term life insurance policy, you may be able to convert your coverage to a permanent policy. This option is available with many insurance companies, but you should expect your monthly premium to increase.  

Reasons you may want to convert from term to perm:  

  • Coverage lasts the rest of your life without expiring
  • Access to cash value savings during the life of the policy
  • Money accrued in your cash value savings grows tax-deferred
  • If you have a lifelong dependent such as a special needs child or loved one with a critical illness and know they’ll need continued financial support 


The bottom line

Quility offers universal life insurance and whole life insurance policies from more than 80 life insurance companies. Our licensed insurance advisors are ready to help you customize the best plan for you and your family, and they can check back in to help you make policy adjustments as your needs change later in life.

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

Let’s Get Started

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

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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.