Permanent Life Insurance

What is permanent life insurance?

Permanent life insurance is a blanket term for life insurance that's lifelong (unlike term life). In general, there are three types of permanent life insurance: whole life, universal life, and variable universal life. Each gives your beneficiaries a death benefit (payout) when you pass away—no matter when that happens. Permanent life also builds cash value over time that you can use for anything, at any time.² And with whole life, you have the chance to earn dividends.³

Want to know more about Permanent life insurance? Take a look at our article. Or talk to an advisor today.

How does permanent life insurance work?

Once your advisor helps you figure out how much coverage you need, you'll go through an application process that typically includes a health screening. Each type (whole life, universal life, and variable universal life) has different premium options, so you'll need to choose which works best for you.

Over time, your permanent life insurance policy could also accumulate cash value which can become a flexible asset in your portfolio that you can use for anything, at any time.²

With a whole life policy, you can earn dividends (while not guaranteed, we've paid dividends every year since 1872) which if you roll them back into your policy, can help build the cash value quicker and increase your death benefit.³

Of course, when you pass away the company will pay your beneficiaries the death benefit.

Ready to talk more about permanent life? Connect with one of our advisors today.

What's the difference between permanent life insurance and term life?

Term life insurance is like renting a home. You pay rent (insurance premium) each month and when your lease (term) is up, you walk away (no more coverage to protect loved ones) and there's nothing to show for it financially.

Permanent life insurance, however, is like buying a home. With each mortgage payment (insurance premium), you build equity (cash value of your policy). So when you pay the premiums on your permanent life policy, you're building value while you're still alive, and eventually your policy will become a valuable asset that you own.

And because permanent life has more benefits, it's typically more expensive than the same amount of term insurance for the same person.

Want more details on the differences between term life and permanent life insurance? Our article can help.

What are the different types of permanent life insurance?

There are three kinds of permanent life insurance that can give you the protection you need: whole life, universal life, and variable universal life. All give you lifelong coverage¹ and could build cash value over time that you can use for whatever you need, whenever you need it.² And whole life can earn dividends that can be taken as cash, used to pay premiums, or buy more coverage.³ Get more details on our different types of life insurance.

Is permanent life insurance a good investment?

Permanent life insurance is not an investment. However, it can give you additional benefits that you can use throughout your life. Permanent life can accumulate cash value which generally will grow tax-deferred and can be a source of money that you can tap at any time for any reason.² And because the cash value of non-variable permanent life insurance doesn't decline with the market, it can serve as a stable source of funds in your overall financial plan and investing strategy. See how a permanent life insurance policy can be a growing asset that you own.

How much does permanent life insurance cost?

There are a lot of options to choose from, so the cost will vary. What you pay monthly (or yearly) will depend on the details of your policy, the amount of coverage, as well as your age and health. Ready to get started? Connect with one of our advisors today.

How does the cash value of permanent life insurance work?

When you pay your premiums some of it goes to cover the costs of insuring you, while the rest goes to your provider's overhead and your policy's cash value.¹ The cash value will grow based on the company's performance (the rate of return will vary by company and policy type). With whole life insurance, your cash value never declines, which can make it a stable source of funds within your financial plan. It takes several years of paying premiums for the cash value to grow to a useful amount. Once that happens, you can use it for anything (although taking money out reduces the death benefit).²

Want to learn more about cash value? Here's an interesting article worth reading.

Does permanent life insurance earn dividends?

Typically, only whole life policies earn dividends. However, they aren't guaranteed to be paid each year (just so you know, we've paid them every year since 1872). How they work is simple. When a company's payouts (death benefits), expenses, and investment returns for the year are better than the assumptions underlying policy guarantees, it can choose to pay some or all of that money back to policyowners as a dividend.

See more on how dividends work. Watch the video.

How do permanent life insurance premiums work?

It depends on the type (whole life, universal life, or variable universal life) that's best for you. For each, you can choose the length of time you'd like to pay your premiums. So if you want more flexibility, you can adjust how much you'll pay in a given year. If you'd like more certainty, you can choose a policy where premiums never change.

Talk to an advisor about which type will best fit your goals. Get matched with one today.

How does the death benefit of permanent life insurance work?

After the insured passes away, the beneficiary needs to notify the life insurance company and submit the required paperwork (e.g., a copy of the death certificate to initiate a claim). Once the claim has been processed, the insurer will get in touch to go over the payout and options for how the beneficiary would like to receive the money. How long it takes to receive the death benefit can vary greatly, depending on how quickly paperwork is submitted, but expect anywhere from a week to a month or more for a payout.

Ready to get lifelong coverage? Get matched with an advisor today.

What types of permanent life insurance policies does Northwestern Mutual offer?

The Northwestern Mutual difference