Does Permanent Life Insurance Have a High Payout?

Permanent life insurance has the potential to have extremely high payouts to the beneficiaries. Of course, this is dependent on if the policy has been paid up to date by the time the policyholder has died, or if there are loans against the policy that are smaller then the actual death benefit amount.

Permanent Life Insurance Basics

During the course of the policyholder’s lifetime, they will make premium payments towards the permanent life insurance policy. These premium payments contribute to the value of the permanent life insurance policy in two ways:

1. A portion of the contributions applies to the death benefit that will be paid out upon the policyholders demise
2. An allotment of the fees go towards building cash value in the permanent life insurance policy

Permanent Life Insurance Payouts Depend on Contributions

The actual payout amount of a permanent life insurance policy will be based on the dollar amount of premium payments made over the life of the policy contribution schedule. That money received by the beneficiary will be tax free, thus adding value to the permanent life insurance payout amount.

The formula for ensuring a high payout for a permanent life insurance policy is quite simple. The more cash the policyholder contributes during their life time, combined with a long life and not touching the principal investment of a permanent life insurance policy, the higher the payout amount will total.