Permanent Life Insurance

Unlike term insurance, permanent life insurance has no specified term, subject to policy conditions. A permanent life policy calls for premiums to be paid for as long as the insured lives.

• A permanent life policy accumulates cash value.

If the insured dies, the death benefit is payable (subject to policy terms). If the policy is surrendered before the insured dies, the cash value is payable (minus any outstanding loans). Loans may be made from the insurance company against the cash value of the policy at a rate guaranteed in the policy as security. The maximum loan rate guaranteed in the policy may be much lower than that available from a bank.

Regardless of where the loan is secured, if the insured dies prior to the loan being repaid, the amount of the loan and any interest due must be repaid from the death-benefit amount.