Life insurance | health insurance | for your needs, wants, and PHILANTHROPY
icon for life insurance showing a headstone
Why get coverage that
Lasts your entire life?

Life Insurance: Permanent

Learn about the tax benefits and
other advantages you get if you have assets

Your benefits

Permanent life insurance is designed to last your entire life, which makes the probability of a payout 100%. In contrast, temporary “term” life insurance feels like an expense and is a “gamble” because coverage ends while most are still alive.

Permanent life insurance is often used for:

  • Wants
    • Treating your family equally or fairly
    • Enhancing your retirement income
    • Preserving more of your estate after tax
    • As an asset: diversifying your assets, replacing other assets, transferring assets to your heirs tax effectively, protecting your assets from creditors
    • Corporate planning: reducing taxes, accessing corporate assets personally tax-free, extracting assets tax-free
  • Philanthropy
    • Donations at your death: donate the death benefit
    • Donations during your lifetime: use the tax savings to get life insurance that replaces the value of your donations

Each of these uses has pros and cons. Each takes time to understand. This is why we offer private consultations to discuss your own situation and answer your questions.

The types of permanent life insurance

There are three common forms of permanent life insurance:

  1. Term 100: premiums are level and payable to age 100 (at which time coverage still continues until your death)
  2. Whole Life: you get simplicity because the insurer makes all investment decisions for you and smooths the returns. Premiums are often guaranteed and could be paid in 10 years or 20 years. 
  3. Universal Life: you get strong guarantees, transparency and flexibility. You can see where each premium dollar goes. You can stop/start your premiums. You decide what premium to pay between a minimum and maximum. You make the investment decisions. 

Each type has pros and cons. 

How does permanent life insurance work?

Each type of permanent life insurance works differently. What’s common is that the death benefit is generally tax-free. 

With whole life and universal life, you can build equity (a “cash value”). Your investment grows in a tax-sheltered environment and can be used to increase the death benefit (which offsets erosion from inflation). The cash value can be accessed by withdrawals (which may be taxable) or loans (which are tax-free).

Your largest tax bill is often at the later of your death or your spouse’s death. You can get Joint Last To Die (JLTD) coverage which addresses this situation. The benefit is paid out at the time of the second death. The premiums are lower than for a single life because the payment of the death benefit is deferred. 

Who qualifies for permanent life insurance?

Qualifying for life insurance — temporary or permanent — is much easier than qualifying for health insurance like critical illness insurance, disability insurance, long term care insurance, and medical insurance.

If you have health issues (e.g., diabetes, hypertension) or engage in risky activities (e.g., mountain climbing, scuba diving), you may face a higher premium, exclusions, or be declined.

With Joint Last To Die, an unhealthy or uninsurable life can sometimes be included in the contract as long as one life is healthy. In essence, the contract is single life coverage on the healthy life with a reduced premium.

How might permanent life insurance help you?