This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

5 Keys To Choosing Permanent Life Insurance

Purchasing life insurance requires a three-step process. First, establish your goals for the insurance. Are you trying to replace your income for your dependents for a limited time or do you want to establish lifelong protection? Second, estimate how much insurance you need and how much you can afford to pay for it. Third, compare term life insurance and permanent life insurance products.

To help you figure out the best option for your particular situation, we outline five key factors to consider when assessing permanent life insurance.

1. There are different types of permanent life insurance.

"Broadly speaking, there are three types of permanent life insurance, although there are some variations within each type," says Kevin Finneran, vice president for Life Product Management for MetLife in Bloomfield, Conn. "There are levels of risk and reward with all three types. Whole life insurance offers a fixed premium and both guaranteed cash benefit and a guaranteed death benefit, says Finneran.

"You'll have different payment options so you can stretch out your payments until you're 100, pay over 10 or 20 years or make one big payment," he says. "The shorter the pay period, the higher your premium will be."

The two other main types of permanent life insurance are universal life insurance and variable universal life insurance. "(See: " Three types of whole life insurance.")

"Universal life insurance offers a flexible premium plan that works in a way akin to a combined term life insurance plan and a bank account," says Finneran. "You pay as much money into it as you want and the leftover funds after your premium is paid will earn a variable interest rate, subject to a guaranteed minimum interest rate."

Finneran says variable universal life insurance works in a similar fashion except that you can choose between mutual fund-type options in which to invest your cash value. Your returns are tied to how well your investments perform.

2. You will be required to take a medical exam.

"A medical exam is required more often with permanent life insurance policies because of the longer term of your policy," says Finneran. "Even if you have had an illness or have a medical condition, permanent life insurance is an option. There are different risk classes and your premiums are likely to be higher if you have a medical problem, but you won't necessarily be turned down. (See: " How to ace your life insurance medical exam.")

3. Permanent life insurance is an investment vehicle.

Most people purchase life insurance primarily for income replacement in the event of their death, but permanent life insurance also functions as part of an investment strategy.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs