Today there are many different types of permanent policies available and each provides unique characteristics that can be tailored to the individual buyer's need. Currently the options are whole life, universal life and variable universal life. Many clients will evaluate a purchase of a permanent policy based on two primary factors:

• The living benefits – tax favored treatment of the build up of a policy's cash value and tax favored access to the cash value.
• Permanent need for death benefits – the planning need typically has to do with Estate Tax Funding, Business Continuation or Charitable Giving.

The policy owner pays a fixed, level premium and cash values accumulate at a guaranteed* rate of return. The insurance company promises to pay a guaranteed death benefit. It is important to understand that the assumptions of a whole life contract are largely based on having a level premium that is sufficient so that the total cash value will equal the death benefit at age 95 or age 100.

A universal life contract will also have a death benefit and a cash value savings component; however the premium will be based on the pricing of each individual component of the contract. The policy owner can increase or decrease premium payments as long as there is sufficient enough value in the policy to cover the charges. Cash value accumulations reflect current interest rates or are tied to a stock market index or a professionally managed fund.

A permanent life insurance policy can have very attractive tax favored features such as tax deferred growth and tax advantaged access to cash values. Our experience suggests that it is extremely difficult to ask one insurance policy to try to accomplish two primary objectives of large death benefits in addition to good cash accumulation. Therefore we would suggest first determining the primary objective of the policy. If cash accumulation is the primary objective, then in order to maximize tax favored cash value growth, care must be taken to reduce costs. The largest cost of an insurance policy is the underlying "cost of the insurance". If death benefits are the primary objective, a market analysis to determine the best guaranteed death benefit at the lowest cost is appropriate.