The premiums that are
charged on permanent policies are typically higher than those of term life coverage.
Not exact matches
In addition, withdrawals from some
policies may be subject to surrender
charges and could have a
permanent effect
on the cash value and the death benefit.
While a
permanent policy's cash value can be borrowed against to help with expenses such as retirement or college tuitions, the loans can reduce the death benefit and cash value of the
policy and the loan interest may be
charged on the amount borrowed.
In addition, withdrawals from some
policies may be subject to surrender
charges and could have a
permanent effect
on the cash value and the death benefit.
The two main reasons you might not want to change
policies are surrender
charges (only in
permanent plans such as whole life or universal life), and your new
policy will likely contain a new two year contestable period, which means the company could potentially weasel out of paying the life insurance proceeds upon your death if you die within 2 years of purchasing the
policy and they find that you answered questions fraudulently
on your application.
Although the premium that is
charged on a
permanent life insurance
policy will usually start out higher than that of a comparable term life insurance plan, the amount of the premium
on a
permanent policy will typically be locked in for life.
And when you decide you don't want the «term»
policy anymore, simply surrender the
policy and receive a full distribution of your accumulated cash value without any surrender
charges;
on the other hand, if it turns out that you do need the
policy for longer than the original term time horizon, you have a
permanent policy that can be maintained and receive additional deposits as necessary, without the hassles and hazards of seeking out a term conversion.