Permanent Life Insurance: Premiums Ever Change?

Posted in Life Insurance , Permanent Insurance

September 22nd, 2009

Once a policyholder researches, plans and then commits to a permanent life insurance policy, the premiums will not change during the course of the contract.

Permanent Life Insurance Basics

A permanent life insurance policy is a great way for policyholders to provide their heirs with some financial comfort upon their worldly expiration, and can serve as a tool that can be used to build a tidy nest egg. During the initial stages of setting up the permanent life insurance policy, investment options and benefit amounts are determined. Based on that information, a monthly premium is determined and part of the money goes towards the insurance while a fraction is applied toward the investment portion. The permanent life insurance premium will never change.

The reason why this type of life insurance is called “permanent” is because some of the features to maintain the policy will remain constant for the entire life of the arrangement. For example, not only will the premiums for permanent life insurance never change, a permanent life insurance policy cannot expire. It is important to make sure to pay the fixed premium charges of your permanent life insurance policy consistently as lack of payment is the one thing that can convert permanent life insurance into a temporary policy.

Permanent life insurance was launched in the 1970′s as a way for insurance companies to diversify their business into the world of investments. Some types of permanent life insurance may pay off monthly dividends that can be applied to pay the premiums due during that time period. Although the premium rate for permanent life insurance is fixed, the dividends can be used to offset the cash amount due for a premium.