What to know about permanent life insurance

As you explore the different types of coverage, you'll likely come across products referred to as "permanent life insurance." There are several types of permanent life insurance, each with unique features and benefits that may be a good fit for your needs. Let's take a closer look at this type of life insurance and how to determine if it's the right coverage for you.

What is permanent life insurance?

Permanent life insurance policies cover your entire life, from when you obtain coverage to when you pass away, as long as you pay your required premiums. Some types of permanent life insurance include a savings portion where you can potentially build cash value over time. This cash value can then be accessed to help with various needs, like paying for unexpected expenses, helping fund a child's education, or supplementing your retirement income.

What is the difference between term and permanent life insurance?

Unlike term life insurance, which provides coverage for a specific number of years, permanent life insurance lasts your entire lifetime. As long as you keep up with your premium payments, your coverage will never expire.

How does permanent life insurance work?

Each time you pay your premium, a portion goes toward maintaining the policy's death benefit and another goes toward your cash value. This cash value can earn interest and grow generally tax-deferred, which means you do not pay taxes on any earnings as long as the policy remains active. Typically, there is a waiting period after the life insurance coverage begins before you can withdraw funds. With coverage in place, your beneficiaries will receive a death benefit when you pass away to help pay funeral costs, replace lost income, or assist with medical bills or other expenses.

What are the different types of permanent life insurance?

While all permanent life insurance is designed to provide coverage for your entire life, there are different types of permanent coverage with their own unique features.

Whole life insurance

Offers basic death benefit coverage to help ease the financial burden of funeral costs and other final expenses. You pay a set premium amount that will not increase as you age or if you experience a change in your health status. The policy can build cash value at a guaranteed rate over the life of the policy.

Indexed universal life insurance (IUL)

An IUL policy offers cash value growth potential. You can choose your premium payments to be allocated to a fixed account, an index account, or a percentage of each. The fixed account earns interest at a set rate, and the index account earns interest based on market performance (subject to a cap or maximum interest rate used in calculating the index credit and participation rate for the product). A zero percent floor protects you against negative market performance. The interest credited to an index account is based on the performance of the index, and is not directly invested in the stock market.

How to decide if permanent life insurance is right for you

Permanent life insurance can offer valuable financial protection to your loved ones while potentially building cash value for your needs in the future. To explore the features of permanent coverage and determine which type of policy may be a good fit, consider meeting with a financial professional to discuss your financial goals, life insurance needs and find coverage that is right for you.

Neither Midland National® Life Insurance Company nor its agents give tax advice. Please advise your customers to consult with and rely on a qualified legal or tax advisor before entering into or paying additional premiums with respect to such arrangements.

Income and growth on accumulated cash values is generally taxable only upon withdrawal. Adverse tax consequences may result if withdrawals exceed premiums paid into the policy. Withdrawals or surrenders made during a Surrender Charge period will be subject to withdrawal charges, processing fees, or surrender charges, and may reduce the ultimate death benefit and cash value. Surrender charges vary by product, issue age, sex, underwriting class, and policy year.

Life insurance policies have terms under which the policy may be continued in effect or discontinued. Permanent life insurance requires monthly deductions to pay the policy's charges and expenses, some of which will increase as the insured gets older. These deductions may reduce the cash value of the policy. Current cost of insurance rates and current interest rates are not guaranteed. Therefore, the planned periodic premium may not be sufficient to carry the contract to maturity. For costs and complete details, refer to the policy or call or write Midland National One Sammons Plaza, Sioux Falls, SD, 57193. Telephone 800-923-3223

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

Indexed Universal Life Insurance products are not an investment in the "market" or in the applicable index and are subject to all policy fees and charges normally associated with most universal life insurance.

The primary purpose of life insurance is to provide a death benefit to beneficiaries. Because of the uncertainty surrounding all funding options except savings, it is critical to make personal savings the cornerstone of your college funding program. However, even a well-conceived savings plan can be vulnerable. Should you die prematurely, your savings plan could come to an abrupt end. To protect against this unexpected event, life insurance may be the only vehicle that can help assure the completion of a funding plan. In addition to the financial protection aspect of insurance, the tax-deferred buildup of cash values can be part of your college savings plan. Generally, if the policy is not a Modified Endowment Contract then tax-free withdrawals can be made up to the contract's cost basis. Moreover, if the policy is not a Modified Endowment Contract, then loans in excess of the cost basis are also tax free as long as the policy remains in force.

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