Permanent Life Insurance: Payout Basics

Posted in Life Insurance , Permanent Insurance

October 1st, 2009

Are you thinking about getting life insurance? If so, you’re probably aware that you have several options. There’s term life insurance, and then there’s permanent life insurance. Many people like to get permanent life insurance because it builds up in cash value over time, and when they get to be a certain age – usually 65, which is the average age of retirement – they can start getting their investment back in the form of annuities. Should the holder of a permanent life insurance policy forgo any annuities, all the cash value in the permanent life insurance policy will go to the beneficiaries. When it comes to the payout amount for the beneficiaries, the maximum dollar amount will be determined by the stipulations of the permanent life insurance policy itself.

Cash Value Benefits

People who get term life insurance will be covered up to the amount that their policy stipulates. If you get coverage for $1 million, the people you’ve named as beneficiaries will split the money. If you get permanent life insurance, it works the same way, but there is also the cash value component involved. With a permanent life insurance plan, whether it’s whole life insurance, universal life insurance or variable life insurance, you are accumulating money that will either earn interest or be invested in order to make more money. So, let’s say you get a permanent life insurance policy with a death benefit of $5 million dollars. Your beneficiaries will get that money plus the total cash value that you put into the permanent life insurance policy. The maximum payout for permanent life insurance, therefore, will be the maximum amount stipulated by the policy you chose, plus its cash value.

To learn more about maximum payouts for permanent life insurance, whole life insurance, term life insurance, universal life insurance, variable universal life insurance, or any other aspect of life insurance, be sure to consult with an industry professional.