What is permanent life insurance?

If you’re looking for lifetime protection and a host of flexible benefits, this article will explain how a permanent life insurance policy can give you and your loved ones the peace of mind you acquire from leaving a legacy.

A couple sitting at the kitchen table talking to an agent.

Permanent life insurance gives you lifetime protection—and more. 

Permanent life insurance is a category of life insurance products that are designed to give you a lifetime of protection and other long-term benefits. These products can be a solid choice for anyone who needs 20+ years of coverage or would like to make sure they can leave behind a financial legacy for their loved ones.

It’s whole life insurance—and more. 

When most people think about permanent life insurance, whole life insurance is usually what they have in mind. That’s because provided that premiums are paid whole life is guaranteed to last the rest of your life—no matter how long you live.1 Other products in this category, such as Universal Life and Variable Universal Life also provide long-term coverage, but in most cases are purchased by people who are willing to trade the lifetime guarantee for a bit more flexibility when it comes to benefits and pricing. 

What are the types of permanent life insurance?[i]

Life insurance can help provide protection for you and your family’s future. There are many options when deciding on a product that fits your needs. The following permanent life insurance policies are the most common and offer cash value2. 

Whole life insurance

Whole life is permanent life insurance, designed for the long-term, with steady cash value growth. Whole life can be a versatile tool to help meet several needs. The death benefit provides cash to your beneficiaries when you pass away, plus you get potentially tax-free access to your cash value while you’re alive. This is cash that can be used to help you fund college education, assist in a down payment for a home, supplement retirement income, or help pay for anything else you need.  Of course, accessing the cash value of a whole life policy will reduce the available cash surrender value and the death benefit. 

Universal life insurance 

Universal life offers a combination of long-term coverage and flexibility regarding the timing and amount of premium payments, within limits.  Some universal life policies accumulate cash value with interest. However, because interest rate changes may affect your cash value accumulation, and consequently the premiums you need pay, it’s important to monitor a universal life policy closely. 

Variable life insurance 

Variable universal life provides a life insurance benefit in exchange for flexible premiums. The policy’s cash value will fluctuate, including investment gains and losses. Your premiums can be invested in investment options whose underlying holdings may be stocks, bonds or other investments.    

Indexed universal life insurance 

IUL is a fixed life insurance policy which offers the premium flexibility common to other universal life policies. The interest credited is linked to the performance of a stock market index, but that interest credited may be limited by interest rate caps or participation rates. There may also be an interest rate floor, below which the credited interest will not fall.

What’s the difference between permanent life insurance and term life insurance?

Permanent life products are designed to provide a minimum of 20+ years of protection, while term life policies represent temporary life insurance coverage and have shorter durations (usually five to 10 years). Unlike term products, permanent life insurance coverage lasts a lifetime, and its cost is based on your age when you initially buy your coverage. (Term premiums, which are lower to begin with, rise as you age.)   

Here's how permanent life policies work. 

Since permanent life insurance provides long-term coverage, you can enjoy legacy protection that lasts anywhere from 20 years to the rest of your life. As long as all premiums are paid, you can be sure that your beneficiaries will receive a lump-sum payment whenever you pass away. What’s more, permanent life policies come with a host of helpful benefits—some of which you can use during your lifetime if your needs or circumstances change. 

Three key benefits of permanent life insurance: 

  1. Long-term coverage: - If you want protection that’s built to last, permanent life insurance is the only way to go. That’s because term life insurance policies have a limited duration, whereas permanent life polices provide long-term protection that you and your loved ones can count on. 
  2. Cash value accumulation: With permanent life insurance, you will have the opportunity to generate cash value—a resource that builds up over time and that you can use during a financial emergency, to help prepare for important events like buying a home, or to supplement retirement income.3
  3. Tax-advantaged growth: Since the cash value of a permanent life insurance policy grows tax deferred, it may grow even faster than your money would in a non-tax deferred vehicle. Even better, any loans or withdrawals4 you take are completely tax free, so this can be an efficient way to access money.5

Are there any downsides to owning permanent life insurance?

While there are pros and cons to any life insurance policy, it really depends on your needs. For example:  If you need coverage for a limited time only—like until a child graduates from college or until your mortgage is retired—permanent life insurance may not be your most cost-effective option

Find out which permanent life product is right for you. 

Since each permanent life product operates a little differently, we recommend working with a New York Life agent. Together, you can explore all your options and see which one fits your needs and budget. If you want, an agent can also show you some ways to customize your coverage and can even provide some sample projections of how your cash value might perform.

Frequently Asked Questions

Whole life insurance is the only product we offer that provides “permanent” coverage. By that we mean coverage that is guaranteed to last the rest your life—no matter how long you live. Other products, such as universal life and variable universal life are often thought to provide “permanent” coverage but generally provide long-term coverage (usually 20 years or more).

If you plan to keep your coverage for 20 years or more, permanent life insurance can be a great value. That’s because it offers the longest coverage with the most benefits—and a death benefit that will ultimately be paid to your loved ones.

Over the lifetime of a policy, premiums for permanent life insurance may be less than the cost of having to renew term life insurance as you get older, because premiums for temporary insurance increase the older a person becomes.

If you have questions about permanent life insurance, or would like to compare it with other alternatives, please visit any of the articles below, or contact your New York Life agent.


Want to learn more about life insurance that builds cash value?

A New York Life financial professional can help determine what’s right for you.

1The guarantees of a life insurance policy are backed by the claims-paying ability of the insurer.

2Accessing the cash value will reduce the available cash surrender value and death benefit.

3Accessing the cash value will reduce the available cash surrender value and death benefit.

4Loans against your policy accrue interest and decrease the death benefit and available cash surrender value by the amount of the outstanding loan and interest.

5Certain tax advantages are no longer applicable to a life insurance policy if too much   money is put into the policy during its first seven years, or during the seven-year period after a “material change” to the policy. If the cumulative premiums paid during the applicable 7-year period at any time exceed the limits imposed under the Internal Revenue Code the policy becomes a “Modified Endowment Contract” or MEC. A MEC is still a life insurance policy, and death benefits continue to be tax free, but any time you take a withdrawal from a MEC (including a policy loan), the withdrawal is treated as taxable income to the extent there is gain in the policy. In addition, if you are under 59 ½, a penalty tax of 10% could be assessed on those amounts and upon surrender of the policy.


[i]Oregon Policy Form Numbers for New York Life Whole Life: New York Life Insurance Company is the issuer of New York Life Whole Life. In Oregon, the Whole Life policy form number is ICC18217-50P (4/18). SMRU # 1891275


New York Life Universal Life: In most jurisdictions, the New York Life Universal Life form number is ICC19-319-51P, New York Life Protection Up to Age 90 form number is ICC19-319-51P, and New York Life Custom Universal Life Guarantee form number is ICC18-318-54P.  State variations may apply. The Money Back Option Rider form number is ICC18-318-292R. State variations may apply. The Chronic care Rider form number is ICC18-318-291R.