Permanent Life Insurance can be classified down into three basis types, which include universal life insurance, whole life insurance and variable life insurance. It is very important to know the difference between these three so you can make a good decision for your future. There is differences with each type of policy and one of the major factors are whether they guarantee the yield on the cash value. By guaranteeing the cash value on your life insurance policy you earn interest on the policy forever as long as you keep paying on it. Another big determining factor in what type of permanent life insurance policy you choose is if they guarantee the mortality and expense costs. We will go over each policy briefly so you can get an idea of what the differences are.

• Whole Life Insurance is probably the most basic out of the 3 different insurances. The mortality costs, expenses and cash value yield are all fixed and don’t change. Now every company will offer similar policies, but each will have small differences of what makes up their whole life insurance. In most cases people who decide to go with whole life are looking for a guaranteed return, low risk and a lifetime policy. If anything happens with the economy or a dealth epidemic happens it still won’t change a thing with their policy. The rates won’t go up and they won’t go down either. Meaning if someone finds the cure for aids, cancer and predicting death you policy will still stay the same even though the insurance issuer has reduced it’s risks significantly. That is a situation where the life insurer benefits because they are still getting those guaranteed payments.

• Universal Life Insurance has a variable mortality costs, expenses and cash value yield which make it more appealing to those looking to make a little more potential money. There is more risk involved because it uses a variable yield, but has the potential to pay out more money. It also has several options to vary premium, change death benefit and suspend premiums. It gives the policy holder more flexibility and greater control over their life insurance and what they want to do with it. These policies really became big in the 1980’s when the interest rates were raging high and people were looking for a good return on their life insurance. So many insurers came out with these universal plans that offered higher return then the common whole life.

• Variable Life Insurance is a little different then your standard life policy because you are able to invest it a much broader market place. Variable basically means you are to invest in the stock market, mutual funds and other investment options. The reward with these products can be much higher than anything else, but you need to be careful as it can backfire on you. The risk is much higher and you are could loose your money as well. It is best to speak with a financial advisor with experience in this field before jumping in head first thinking you are going to easily get rich quick. Another major point you must know is that if your policy doesn’t perform well and it looses money you will be required to make up the difference. So you policy premiums will be increased to take care of the policy.