Permanent Life Insurance, as the name suggests, offers coverage over the entire lifetime of the life insured. This type of lifelong Insurance never expires and depending on your policy it can have an investment component. There are 3 types of permanent life insurance products; Whole Life Insurance, Universal Insurance, and Term to 100 Insurance
Whole Life Insurance
Whole Life Insurance provides coverage for the entire lifetime of the one's life insured. Premiums typically remain level over the duration of the contract. A whole life policy builds up a cash surrender value (CSV) over time. If the policyholder surrenders the policy before the death of the life insured, he/she may be entitled to receive payment of that CSV, less any applicable surrender charges.
Universal Life Insurance
Universal Life Insurance provides coverage for the entire lifetime of the one's life insured, and it may also include a savings component that is created through the deposit of excess premiums. Within certain limits, the policyholder can use a Universal Life policy to accumulate savings that are completely sheltered from tax if they form part of the death benefit, or tax-deferred if they are withdrawn before death. UL insurance policies are noted for the flexibility they provide the policyholder.
Term to 100 Life Insurance
Term to 100 or T-100 Life Insurance also provides coverage for the entire lifetime of the one's life insured, but the policy matures at age 100, such that premiums are no longer payable. Term to 100 policies typically does not have a cash surrender value (CSV).
How to decide on a coverage amount
An appropriate amount of life insurance coverage should at least cover your outstanding debts, taxes, probates, final expenses, and your family's lifestyle expenses; ensuring that your dependents don't become financially obstructed in the event of your untimely passing.
As a general guideline, you may consider your coverage to be roughly 10 to 12 times your annual income. You can use the Insurance Calculator to determine how much life insurance may be required in your case.
Anything to consider if you Smoke
Yes, the premiums for individuals who smoke are typically higher than the standard non-smoker insurance rates.
Cash Surrender Value (CSV)
The cash surrender value (CSV) of a life insurance policy is the amount that the insurance company will pay to the policyholder if the policyholder surrenders the contract. A whole life insurance policy will typically specify what the guaranteed CSV will be at the end of
each policy year. In the early years of a whole life insurance policy, the premiums exceed the insurance company’s actual costs for the policy, and some or the entire surplus is used to help create a policy reserve.
When a policyholder owns a life insurance policy with CSV, he/she can usually obtain a policy loan from the insurance company of up to 90% against the policy’s CSV.
When is a Life Insurance Company not obliged to pay a death benefit
In a Standard Life Insurance Policy some of the exclusions may include:
Suicide within the first 2 years of Policy
Act of War
Act of Crime
Act of Crime where your Beneficiary is a suspect
Untruthful information on your application
Misrepresentation or fraud
references and credits: CISRO/OCRA