Permanent life insurance: What type is right for you?

Photo of a mother and daughter who have helped to protect their future with permanent life insurance.

Understand your options

Life insurance. You know you need it. But it can make your head spin trying to understand your choices.

Permanent life insurance options have expanded over the years.1 You can pair permanent with term insurance coverage, or use it alone to meet your own needs.

The beauty of permanent life insurance is you can’t outlive your coverage … as long as you pay your premiums, of course. The life insurance death benefit is tax-free money. And you have the potential to build cash value that you can use over the years as you see fit.

Comparing four types of permanent life insurance

 Whole life insurance2Universal life insuranceIndexed universal life insuranceVariable universal life insurance
PremiumFixed—never goes upFlexible—you can change the amount you pay, if neededFlexible—you can change the amount you pay, if neededFlexible—you can change the amount you pay, if needed
Death benefitFixed, for lifeFlexible—you can change the amount of coverage you have, within limitsFlexible—you can change the amount of coverage you have, within limitsFlexible—you can change the amount of coverage you have, within limits
Cash valueGuaranteed cash value typically grows at a rate that equals the death benefit at age 100Accumulates cash value based on a fixed interest rate set by the life insurance company; has a guaranteed minimumAccumulates cash value based in part on movement of a linked stock market index; has a maximum and minimum rate that can be earnedAccumulates cash value based on market performance; there’s no limit to earnings or loss potential
Can borrow from policyYesYesYesYes
Risk toleranceLowMedium to low (with additional guarantees for death benefit)Medium to highMedium to high
CostHighMedium to lowMediumHigh

When permanent life insurance might be a good fit for you

In certain situations, permanent life insurance may be a good fit for you, such as when:

  • You have a partner, spouse and/or family who depends on your income.
  • You’re a young investor willing to take risks and stay the course for more potential cash value.
  • You already have a term life insurance policy and want to transition a portion to something more permanent.
  • You have a high net worth, and want life insurance for estate or inheritance tax reasons.
  • You want a life insurance benefit for your heirs, no matter when you die.
  • You’ve maxed out your 401(k) and Roth IRA, and want to diversify how your assets are taxed and have more choice in tapping future money.
How much life insurance do you need?

Use our quick calculator to find out and get a quick insurance quote for term or permanent insurance.

1 All guarantees and benefits of insurance policies are backed by the claims-paying ability of the issuing insurance company; they are not backed by the broker/dealer.

2 Principal does not offer a whole life insurance product.

Before investing, carefully consider the investment option objectives, risks, charges, and expenses. Contact a financial professional or visit principal.com for a prospectus or, if available, a summary prospectus containing this and other information. Please read it carefully before investing.