Permanent Insurance - Overview

Permanent life insurance products provide protection throughout the life of the insured person. The distinction is that permanent insurance does not have an expiry date and it does not have an increasing premium every 10 or 20 years, whereas term insurance will expire typically at age 80. Permanent insurance has a level-premium structure and pays a death benefit when the life insured dies, regardless of his/her age.

Whether a particular person requires term or permanent insurance and which particular product is most appropriate, depends on the person’s specific circumstances. Relevant considerations would include:

  • The need for the insurance (i.e. temporary, long term or permanent).
  • The need or desire of an increasing death benefit over time (i.e. is the purpose for a level amount or is the need growing?).
  • The need or desire for the tax-exempt investment features within a permanent policy.
  • The ability to fund the premiums (both in the short term and the long term).

Permanent policies can be designed so that the premiums are payable for a limited duration (i.e. for 10-20 years).

Another unique feature of a permanent policy is its capability to earn tax-exempt interest or dividends. The tax-free death benefit will include the initial face amount of insurance and the growth in the death benefit as a result of tax-exempt earnings. 

Permanent life insurance comes in two primary types;