Permanent life insurance

Life insurance is a vital part of any financial strategy. The type you choose will depend a lot on your goals. If those goals include having coverage that lasts your entire lifetime, permanent insurance might be the best choice for you. Unlike term life insurance, which only covers you for a specific time frame (typically 20 years or less), permanent insurance stays in force for life—as long as you continue to pay the premiums.

What is a permanent life insurance policy?

With permanent life insurance you can transfer a death benefit to your beneficiaries free from federal income taxes. Some plans also allow you to build equity, or cash value, on a tax-deferred basis. This type of life insurance is best suited for individuals or business owners with long-term life insurance needs.

How much life insurance do you need?

The amount you need really depends on your financial goals. No two individuals' life insurance needs are the same. Your financial advisor will look at your entire financial picture to help you calculate the right amount for your situation. Factors could include: What you've already saved, what you're trying to save and what you want to leave behind.

Over time your needs and goals will change. Even if you have coverage in place today, it's important to review it with your financial advisor periodically, particularly after the addition of a child, change in marital status, a change in home ownership or when changing jobs if your policy was provided through your employer.

How much does a permanent life insurance policy cost?

Because of the lifetime benefits it provides, permanent insurance can be three to five times higher, on average, than a term policy. The primary reason for this is that unlike term life insurance, which only covers you for a set period of time, with permanent insurance you have coverage for as long as you pay your premiums. The amount you pay can be based on your age, gender, health and the type and amount of coverage you choose. Permanent insurance premiums are generally level, and expenses of the policy are typically balanced out after 20 years.

Types of personal life insurance

Whole life insurance

Whole life insurance provides coverage with regular fixed premiums and a guaranteed death benefit. Whole life insurance also has a cash value that grows at a fixed rate and can be borrowed against.

Universal life insurance

Universal life insurance has flexible premiums and an adjustable death benefit, so you can make changes to the plan to fit your needs. Like whole life, universal life insurance includes a cash value component that grows at a fixed rate.

Variable universal life insurance

Variable universal life insurance also has flexible premiums and an adjustable death benefit, though the cash value component is investable rather than offering a fixed return. This adds risk to the policy but could yield a higher total value

Permanent life insurance vs term life insurance

While permanent life insurance provides lifelong coverage, term life insurance policies cover a specific period, usually 10, 20, or 30 years. Term life insurance only pays the death benefit if the insured person dies while covered during the term. Term life insurance is useful for covering short-term needs, but permanent life insurance provides lifelong coverage and include a cash value component.

Why permanent life insurance from Edward Jones

Each type of life insurance offers benefits and trade-offs. What's appropriate for you will depend on your long-term goals. That's why it's important to work with someone who spends time getting to know you. Contact your local Edward Jones financial advisor for more information about the permanent life insurance policies Edward Jones offers. We'll walk you through all of your options so you can make the right choice for your situation.

Permanent life insurance FAQs

What are the disadvantages of permanent life insurance?

Permanent life insurance often comes with higher premiums than term life insurance. Also, some people may prefer the short-term flexibility of term life insurance policies over permanent life insurance.

At what age should you get permanent life insurance?

Getting permanent life insurance in you 20s or 30s could help you lock in a low premium while allowing the cash value component time to grow. However, the best time to open a permanent life insurance policy depends entirely on your goals.

What happens if you cancel a permanent life insurance policy?

Cancelling a permanent life insurance policy could come with costs and fees which will be deducted from the cash value. Also, cancelling means that you are no longer covered by the policy, so you may need to seek coverage elsewhere.