Advantages of permanent Guaranteed pay plan

Premium is usually guaranteed when you first purchase the policy. It does not change till death. So the client pays for life and coverage for life.

Most of permanent insurance plans allow you to pay for a limited number of years, then never again and coverage will continue till death. Usually, available in these choices :
- Guaranteed 10 pay
- Guaranteed 15 pay
- Guaranteed 20 pay
- Guaranteed Pay to age 65

These above guaranteed paid up feature available in both whole life and universal life insurance concept.

Some plan provides guaranteed cash value and some allows to provide extra funding in policy in order to grow tax free policy fund. Policy fund can be used to various purposes which depend on policy feature

Both participating and non participating features are available which depends on company plan.

Participating Life Insurance

Participating life insurance can combine permanent life insurance protection with an opportunity for tax-preferred cash value growth. The base insurance protection is guaranteed for life, as long as you pay the premiums when they are due.

Participating life insurance policies have the potential for earning policyholder dividends. The guaranteed premiums, guaranteed cash surrender value and guaranteed death benefit are based on these assumptions and are in place for the life of the policy.

Who is it for?

• want long-term cash value and death benefit growth
• are interested in making sure that your estate transfers intact to your beneficiaries
• would like to access the cash values in the future to supplement your retirement income
• would be best option for juvenile ( Child ) policy in early age.

What are premium payment options?

It depends on company’s policy designs. Most of companies have these premium payment options
- Life pay
- 20 pay
- Pay to age 65

As it mentioned above, this type of policy has opportunity to earn dividend which can be used in 5 different options. The choice you make in both the premium payment option and the dividend option will affect the values in your policy
- paid-up additional insurance
- enhanced insurance
- annual premium reduction
- dividends on deposit
- cash payment
In addition guaranteed cash values that typically begin at the end of year five which can be used for these options : policy loans, withdrawals, Living benefit.

Who is it for?

There is no doubt that the parents must insure them self first. Child is precious. Life Insurance for children can provide peace of mind for parents. It might be best way to invest if it is well invested long term plan. Usually, under age 16, child insurance is issued. Parents are owner of policy, owners pay for policy and child is only insured person. The child has no control of policy.

Advantages of protecting your child

• Premium --- Low premium due to younger age.
• Protection --- Protection to parents and their spouses or children in future. At present time, the parents will be owner and beneficiary. Later, the beneficiary can be changed according to situation in future.
• Future insurability --- Future insurability of child and parents health protected. At present, easy to qualify and better underwriting due to good health condition of insured child and parents. Usually, the parent health is part of underwriting process for any insured person including child as well.
• Accumulation of Fund --- It might be a good investment on child policy, tax advantage saving vehicle, developing good cash value. The plan accumulates cash value and will continue to do so as long as premiums are paid. Instead of depositing money in bank, a parent can invest in child policy which might be best way to bypass probate fee of parent’s wealth. The policy fund can be used for emergency fund as education cost of child, retirement of parent or child in future.
• Good family culture --- Establish good culture by protecting family members in early age.

The parent can take out different type of policy. These two types are well advised to consider:

• Either child term rider in parent’s life insurance policy which can be converted to adult policy after child turn age 21 (some companies allows at age 18 too).
• Permanent policy with 10 / 15 / 20 guarantee paid up options. It could be universal life or whole life or participating life policy. For detail refer to 20 pay life insurance and participating Life Insurance section tab.