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An Introduction to Permanent Life Insurance What is Permanent Life Insurance?

Life Insurance That Stays With You for Life

Permanent life insurance is long-term insurance protection. There are two key characteristics of permanent insurance that set it apart from term insurance:

  1. A permanent policy lasts for your entire life as long as premiums are paid.

  2. Most permanent policies offer the ability to build cash value.

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Why Choose Permanent?

Permanent life insurance is ideal for protection and coverage needs without a specific end point. Permanent insurance can help your family, your business, and you.

With a permanent policy in place, your beneficiaries will receive a typically tax-free death benefit when you die—whenever that may be (per IRC §101(a)).

Your family can use the funds to:

  • Replace your income.
  • Pay final bills and expenses.
  • Stay in the home they love.
  • Keep plans for the future in place.

Your business can use the funds to:

  • Help with business continuation when a partner or key employee dies.
  • Fund non-qualified retirement plans.
  • Assist the exchange of business ownership in the event of your or a partner’s retirement, disability, or death.

You can use the cash value of your policy to:

  • Create an additional source of retirement income.
  • Access money in the event of an illness or other unexpected need.
  • Take income tax-free loans as needed.1  

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What Are the Differences Among Permanent Policies?

The main differences between the types of permanent policies lie in their potential to build cash value and the way they earn interest. The brief descriptions below will give you quick insight into how policies differ.

Whole Life Insurance

is basic coverage. If you pay your premiums on time, you remain covered and your policy builds cash value. Prudential does not offer whole life insurance.

Universal Life Insurance

offers flexibility with premium payments and coverage amounts. Most policies of this type build cash value and earn a minimum interest rate.

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Indexed Universal Life Insurance

has an interest rate based on the performance of an independent financial index (e.g., a stock index). This offers potential for greater growth, but there is a risk of getting a lower rate of return as well.

Variable Universal Life Insurance

has the greatest potential to build cash value compared with other permanent policies because the underlying investment options perform like stocks and bonds. However, the cash value can also decline if the investment options perform poorly.

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Survivorship or Second-to-Die Insurance

is a single policy designed to cover two people. It does not pay the death benefit until both people have died. It can be less expensive than two separate policies and is typically used in estate planning and to provide a legacy to children after both parents have died.

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Cash Value Sounds Good, But How Does It Work?

Each time you make a premium payment toward your permanent policy, a portion of that payment covers the cost of your insurance and policy fees and the remainder is used to fund your cash value account.

From day one, any cash value that accumulates grows tax deferred—as long as the policy is in force. The growth potential varies among the different types of permanent policies depending on what kind of interest is credited and, for Variable Universal Life policies, the performance of the underlying investment options selected. The money in the cash value account can be a flexible resource to help you reach financial goals.

You should know that using a policy’s cash value could reduce the death benefit, shorten or cancel a guarantee, or cause the policy to lapse, and may have tax consequences.

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What’s My Next Step?

We offer a range of permanent policies and riders to meet your needs.

Learn more about the specific solutions offered by Prudential

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Footnote

1 You can access your cash value through loans and withdrawals. In general, loans are charged interest; they are usually not taxable. If a policy lapses or is surrendered, the loan becomes immediately taxable to the extent of gain in your policy. Withdrawals are taxable only when you take more money out of the policy than you’ve paid in premiums. If your policy becomes a Modified Endowment Contract (MEC), different, less advantageous tax provisions apply. Loans and withdrawals may reduce or eliminate the death benefit payable to your beneficiaries.

Guarantees are based on the claims-paying ability of the issuing insurance company and do not apply to the underlying investment options.

Life insurance is issued by The Prudential Insurance Company of America, Pruco Life Insurance Company (except in NY and/or NJ), and Pruco Life Insurance Company of New Jersey (in NY and/or NJ). Variable Universal Life policies are offered through Pruco Securities. All are Prudential Financial companies located in Newark, NJ and each is solely responsible for its own financial condition and contractual obligations. Our policies contain exclusions, limitations, reductions in benefits, and terms for keeping them in force. A financial professional can provide you with costs and complete details.

For variable policies, please consider the investment objectives, risks, and charges and expenses carefully before investing in the contract and/or underlying portfolios. The prospectus and, if available, the summary prospectus contain this information, as well as other important information. You can obtain a copy of the prospectus here. You should read the prospectus carefully before investing.

It is possible to lose money by investing in securities.

© 2019 Prudential Financial, Inc. and its related entities.

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