Permanent Life Insurance programs provide a lifetime cover besides acting as a wholesome investment plan. Your family gets death benefits in case of untoward happenings; you get cash back at the end of the term, and credits against the cash value whenever needed. Even with associated benefits, it is necessary to make some smart decisions when purchasing permanent life insurance. Remember, it is for keeps!
Never a pure investment
When going for permanent life insurance, ask yourself why do you want to purchase this? It is necessary to understand that such insurance policies do not provide an alternative to pure investment. Upfront fees associated with such plans along with related expenses significantly reduce potential returns on the overall cash value.
Go for lower rates
When choosing whole life insurance pick up a policy offering conservative rates of interests during premium payments. Ideally, it should be between 3-4% to place minimum financial pressure on your budgets. Being a long-term policy, lower interest rates helps keep regular payments well within limits.
Make early decisions
If you feel that such life insurance is for you then it is a better idea to go for them early on. This way it is possible to keep the premiums low and affordable. As you age, rate of premium increases in tandem. For example, a person within the age group of 30 to 40 and in prime health has to pay much less compared to somebody who is in his/her 50s. Early on, all the choices will be yours, so that you can look around and find the best deals offering the lowest premium rates. Later however, finding a suitable policy will not be that easy.
Flexi-term insurance
Flexible term insurance policies offering scope for transformation to permanent insurance plans are a good idea. This way you can weigh a particular policy for some time and then if it seems feasible switchover to whole life insurance without further ado. Nobody knows how healthy one is going to remain after the end of the term. This flexi-option allows you to extend the policy term to cover the whole lifetime.
The correct cover
Every individual is different and is so is their requirements for permanent insurance. While it is difficult to predict exact amounts for an appropriate cover, there is a general rule of thumb, which you can apply. It says that ideal insurance should be at least 10 times of the annual income. When it comes to permanent plans, too much is better than too little.
Consider your dependents
Those who are asking, ‘Is permanent life insurance for me?’ should consider people dependent on them and will be financially hurt in their permanent. For example, if you have a spouse, small children, and even ailing parents to take care of such long-term covers can provide an ideal financial backing when they need it the most!
Determine if you are the right candidate for permanent life insurance plans, look through the offers, and make intelligent commitments. Remember, people closest to you are affected by your decision!!
