This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs