How does permanent life insurance work?
Permanent life insurance policies are designed to protect the policyholder throughout his or her lifetime. Policies come in two basic forms: whole life insurance and universal life insurance. Both combine standard insurance coverage with a cash value component. As with any life policy, your beneficiaries will receive a cash payout for the face amount of the policy at the time of your death. A permanent policy may also accumulate additional worth. You are able to access this money through loans or withdrawals, for example to finance a child’s education or place a down payment on a new home, but note that any loans or withdrawals reduce the amount payable at death. If at any time coverage is no longer desired, most policies can be surrendered for their current value.
