Permanent life insurance, also called whole life insurance, covers the insured during his or her entire life and makes provision for a payment to the beneficiaries at the time of the insured’s death, whether accidental or not.
In some cases, it includes a savings element called “cash surrender value.” It corresponds to the amount collected by the insured if the insurance contract is terminated. The cash surrender value can be used to borrow money or to keep the policy in force (pay the premiums). Permanent life insurance can be paid over a chosen period of time, 10 years, 15 years, 20 years or over the lifetime.
It is important to be careful with this type of contract. In fact, some financial institutions offer permanent life insurance policies with stock yields or with dividends (policy dividends), also called surplus, and promise that if the rates remain the same, you will no longer have to pay/OR you can cease payment after a certain number of years and will remain insured throughout your life.
If you are interested in limited-pay whole life insurance, make sure that it is guaranteed. If such is the case, it will be indicated on the first page of your contract that the policy will be paid up at the end of your chosen payment term.
Permanent life insurance is an excellent idea for those who want lifetime protection, without an increase in premiums.
Be careful! Do not base your decision on your contract’s future cash surrender value because you will be disappointed to learn that to receive it, you will have to cancel your policy or borrow at the financial institution’s interest rate.