There are two basic kinds of life insurance: permanent and term. Permanent insurance generally can be continued throughout the insured’s life and will pay the beneficiary whenever the insured dies. Term insurance pays the beneficiary so long as the insured dies during the specified period of time.

Permanent insurance provides lifelong protection as long as premiums are paid. They may build up significant accrued value over time. With all permanent policies, this accrued value is different from the face amount. The face amount is the money that will be paid to the beneficiary when the insured dies. In fact, with many life insurance policies, the beneficiaries will not receive any additional payments for the accumulated value in a policy when the insured dies, but rather that value will be kept by the insurer and lost to the beneficiary. Accumulated value takes time to grow, but after a policy has been in force for several years, it may become substantial, in many times equal to several years of premium payments on the policy.

At Living Wealth Advisors, we focus our analysis on permanent insurance policies, particularly policies that allow the policyowner flexibility in the amount of premiums they pay to the insurance company each month or year. These types of policies are often referred to as flexible premium life insurance policies, universal life insurance policies or adjustable premium life insurance policies.