You should buy permanent life insurance if you have a permanent problem. Many people try to solve permanent needs with temporary life insurance. Term life insurance provides coverage for a limited period of time, thus it is temporary insurance.

Whole life and some modified whole life policies are permanent policies. When you die, regardless of how you die, the company will pay the face amount of the policy to your designated beneficiary or beneficiaries. This death benefit can be paid in one lump sum or in the form of an income.

Look at it this way, if your need for life insurance is likely to always be there then a permanent policy would best fit your particular situation.

Permanent policies usually have level premiums and they also have cash value which accumulate free of income tax. When the cash is withdrawn you pay the taxes.

There are two types of permanent life policies, participating and nonparticipating policies. Participating policies are eligible for annual dividends if the company performs well and declares a dividend. Dividends are not guaranteed.

These dividends can be used in different ways. You may choose to take your dividend in cash, use it to purchase paid up additions, allow it to remain with the company and accumulate interest or use it to reduce your premium outlay.

Premiums for permanent life insurance policies are higher than those of term policies because your coverage lasts for as long as you choose to keep it, even if that is to age 100. The company is carrying your risk for a very long period of time. When you die they will pay.

In the long run participating permanent policies may be less costly than term policies if you consider the cash value and the dividend. You put out more but if you buy from a reputable company that performs well at some point the cash value plus the dividend may exceed the premiums paid. No life insurance company can guarantee this though.

There are other options included in your permanent policy. Let us suppose you paid your premiums for 10 years and you don't want to pay anymore premiums.

• You could elect to take a reduced paid up policy. You policy will remain in force for the rest of your life but for a smaller amount of coverage than you initially contracted for.

• You could choose at that time to keep the full amount of coverage for as long as your cash value plus dividends will keep this policy in force. This is referred to extended term insurance.

• You could elect to tale your cash value plus the dividends earned and terminate your policy.

If you therefore need life insurance for a long period of time and can afford to put out the extra premium required you may choose a permanent life insurance policy. If you can't initially put out the extra premium you may buy a term policy with the option to convert to a permanent policy within a specified period of time set by the company.