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Permanent life
insurance
Permanent life insurance monetarily
insures your life and promises monetary security to your
family after your death. Life insurance is a mutual
contract between the policy owner and the giver.
The insurer or the giver of the policy
promises to pay a fixed amount of money against the life
of the insured person. The owner of the policy and the
person insured may or may not be the same person. The
receiver of the insured money is generally called the
beneficiary, and in most of the cases happen to be the
spouse and children of the insured person.
The policy owner might himself be the
beneficiary in case he or she is not the insured person
directly. For instance, if a man of 40 years of age
insures his father, then he is the policy owner but his
father is insured. And after his father dies he and his
family are going to receive the money. So in this case
the policy owner becomes the beneficiary.
Life insurance can be taken in two forms:-
Temporary life
insurance
Permanent life insurance
In case of permanent life insurance the
policy owner insures himself or others for the whole
life till death. The permanent life insurance matures
with the death of the insured. Since the insurance
company has to pay out the promised amount of money at
the time of death of the insured the amount of premium,
i.e. the amount of money paid by the policy owner every
month to continue the policy, is generally high. The
premium is used by the insurance company to secure the
risk that it has to incur with the death of the insured
man.
Another part of the premium of a permanent
life insurance is saved by the insurance company and
invested for the usage of the insured. This savings has
a cash out value i.e. this money is made available to
the insured person as loans. This helps the insured
person as well as the policy owner to meet different
expenditures which are not possible to be met with the
stipulated income, to repay the bank debts and credit
card debts, to fulfill any wish to satisfy their
soul.
Permanent life insurance can be of two
types:-
1. Whole life insurance- for this type
of permanent life insurance the premium to be paid is
fixed and the tenure of the insurance is continued as
long as the policy owner pays the premium. Once the
premium is missed out the policy will be cancelled even
if the insured is alive. The amount of premiums
accumulated by the policy may or may not be given
back. This depends on the insurance company rules
and the terms of contract. There is a fixed and
inflexible time for the payment of the
premium.
2. Universal life insurance- in this
case of permanent life insurance the premium payment is
more flexible. If the premium is not paid during the
mentioned time then the amount will be deducted from the
cash value accumulated by the insurance company as an
investment. This way the permanent life insurance policy
does not get cancelled and continues till maturity. Once
the premium is paid the extra amount of money is again
added by the company to the cash value corner for
facilitating the insured person and his family.
Universal life insurance involves a
greater amount of premium payment because it
unconditionally continues till the maturity of the
permanent life insurance policy. But it is more
advantageous to opt for universal life insurance because
the accumulated cash value of the policy is much more
than the premiums paid every
month. | 
