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The permanent life insurance – how does it work?

Thursday, January 10th, 2013

Numerous people can’t tell what the difference between the term life insurance and the permanent life insurance is. What people don’t know is that a permanent life insurance can work both as financial protection for those who benefit from one and as an investment that can be used in times of financial distress.

The term life insurance lasts for a fixed period of time, the period of time chosen by the policy holder. This period of time can be anywhere between 1 year and 20 years and after this period is over, the policy holder needs to buy a new term life insurance or has to renew the contract in case he or she didn’t die. The permanent life insurance lasts throughout the entire life of the policy holder. Problems appear only in cases in which the policy holders don’t pay the monthly premiums; they will be informed regarding the problems that they are facing and in case they don’t try to find a solution, the permanent life insurance will be canceled. When the policy holder pays the monthly premiums and doesn’t skip any of them, no problems can appear.

How does the permanent life insurance work? Well, when you sign the contract, you establish a certain amount of money to be paid as monthly premium. The monthly premiums don’t go higher and they don’t go lower; in addition to this, they are not influenced by the health state of the policy holder. Why is this important to keep in mind? Well, there are certain forms of life insurances that are strictly connected to the health state of the policy holder; if the policy holder gets ill, the monthly premium goes high. This is not the case with the permanent life insurance. Unfortunately, the permanent life insurance does not represent a good choice for an elderly person.

In case an elderly person plans on buying a permanent life insurance, the monthly premiums set by the insurance company are surely going to be very high. In this case, the permanent life insurance becomes too expensive and it surely doesn’t represent a wise choice. There are other options that stand at the disposal of the elderly, so they are recommended to check them. For an elderly person, a term life insurance represents a better choice than a permanent life insurance. However, the permanent life insurance is a great choice for young people who are thinking about their families and their financial state in the event of an unexpected death.

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If you are looking for best term life insurance policies comparing quotes for major insurance careers is always an effective step to start with. But for that you are required to apply separately to the insurance companies you are interested about.

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