Is Permanent Life Insurance an Asset?
What Is Permanent Life Insurance?
Permanent life insurance is a way to ensure you loved ones get an income-tax-free cash payout when you pass away, no matter when that happens.
Your policy is a contract between you and the insurance company. In return for your payments, the insurance company promises to pay your beneficiary(ies) a stated amount of cash when you pass away. Your policy covers you until the end of your life, so as long as you keep it in force by staying current with your payments, coverage can’t be cancelled.
You can have multiple beneficiaries, and you can also assign percentages of the death benefit to each beneficiary. You can also select an institution as a beneficiary, which is how many people leave money to their favorite charities or their alma mater.
Most of our clients buy permanent life insurance because they want a guaranteed death benefit for their loved ones. That death benefit can replace lost income, pay off the mortgage, pay a child’s tuition, or give your family a financial cushion as they grieve.
Most insurers will even let you access a portion of the death benefit if you’re diagnosed with a terminal illness. Policy add-ons called “riders” let you purchase other ways to access the death benefit to pay for long-term care, or treatment for critical or chronic illnesses.
The next step in answering the question “is permanent life insurance an asset,” we need to look at its two components: the death benefit and the cash value.
