Benefits of Permanent Life Policy

Too often we spend time fighting amongst ourselves as to whether term life insurance is better than permanent life insurance or vice versa. That is a war we don’t need to wage. We should focus our attention on the clients who have misconceptions about life insurance. While it is essential that we sell life insurance as “life insurance,” its features are the key to finding the right deal for your client. And when the product is right for the client, your value as a practitioner is on display, as is your emphasis on financial security.

Benefits of Permanent Life Insurance - Several experts suggest that permanent life insurance has more combined benefits than any other product available to consumers. A typical discussion with a client about permanent life insurance should include the following:

1. Tax-deferred growth. As premiums are paid in, the interest earned grows tax deferred.
2. Tax-free distribution. When a death benefit is paid to a beneficiary, it is distributed on a tax-free basis.
3. Competitive Return. While the “returns” (i.e. interest earned) don’t typically reflect the stock market, they are competitive when compared to savings accounts, money markets and Fixed Deposits.
4. High contributions. The amount of money that can be contributed on an annual basis and the contribution is subject to tax deduction.
5. Collateral opportunities. There is a leveraging effect offered within permanent life insurance. Without much fanfare, the owner of a permanent life insurance policy can use it as collateral for other funding scenarios.
6. Safe harbor. While some products have growth potential and others have income potential, permanent life insurance (in its many forms) has a feature that allows for principal protection in addition to the other two.
7. No loss provisions. The non-forfeiture options as a standard part of a permanent life insurance contract. These provisions preclude the policy owner from forfeiting any of their cash build up in the policy if it were to lapse.
8. Guaranteed loan option. One of the most agonizing situations to be in is submitting a loan package to a bank and being rejected.  Without fail, the owner of a permanent life insurance policy is allowed to borrow against the death benefit unencumbered.
9. Unstructured loan payments. In the event that the owner of the policy takes out a loan, with minimum conditions, they have absolute control on the amount and frequency of the payments back into the account.
10. Liquidity, use and control. Similar to savings accounts and money markets, permanent life insurance offers the owner easy access to his/her assets on demand.
11. Additional benefits. In addition to the smorgasbord of benefits described above riders, such as accelerated benefits, guaranteed insurability option and waiver of premium, can be added with little cost. An additional valuable feature is creditor protection.

Overcoming Misconceptions - After all of these incredible features have been discussed, the choice is obvious isn’t it? Who in their right mind would say that they don’t want a product that gives them all of these benefits? As a matter of fact, many clients will probably say to you, “I want to get as much of that as I can.”

So what’s the problem? You need to point out that they are buying life insurance, and that’s the rub. Due to the misconceptions that exist about life insurance, our case is often rejected by the client. It’s not their fault, it’s ours. While we cannot control what’s in the media about insurance, we can do our part to build the case as to why permanent life insurance might be the “greatest thing since sliced bread.” If the features are desired, does it matter what it’s called?