Two things come to mind when you talk to brokers about permanent life insurance: “Boy, this doesn’t cover a whole lot” and “Boy, this is expensive!” And for a majority of permanent life plans, that’s true: they high a higher price tag and they’re generally quite transparent (ie: you get the life coverage and not much more.)
This week we’re tackling two of La Capitale‘s forays into the permanent life market, labeled under their “Pure” series: 100% Pure Protection and 100% Pure Evolvement. Both offer the assurance the permanent life provides while tackling, albeit in different ways, the issue of the price tag. The question is: is the carrot enticing enough, or is it just a stick in disguise?
The Pure Series at a Glance
Permanent life insurance has always been hamstrung by a higher cost, leading to many consumers leaning towards lower cost term life insurance even when it’s not as viable or as complete a solution for their needs.
To that end, La Capitale’s Pure series offers some resolution to this problem. Both plans offer the opportunity to recoup premiums paid and surrender the plan (in lieu of a cash value, as you would see on whole life plans), as well as a reduced paid-up option which lets you stop payments and keep a portion of coverage. Both allow you to avoid one critical issue with permanent plans: where costs overrun the value.
You see, permanent plans can feel like fast food: it seems like an excellent idea when you first get it; but a little ways down the road you’re starting to feel the ache of sunk cost. These plans are designed for life: guaranteed fixed premiums and guaranteed coverage, which would be excellent if your debts and other obligations were guaranteed (though in truth, they’re not). Term life’s finite lifespan is a lot more tangible to consumers and thus usually more attractive.
So What’s the Benefit of These Plans?
In short, what makes La Capitale’s Pure Protection and Pure Evolvement attractive is that you’re not punished for thinking long-term. Both allow you to surrender your plan at age 75, up to 50% of premiums paid (or 50% of coverage, whichever is higher).
Both also allow you to stop paying after 10 years and keep some of your coverage, which makes is a highly attractive option for those expecting a reduced income in retirement. To that end, these plans are better options for final expense coverage than either term life or traditional permanent plans (for another example of this benefit: see our review on Equitable Life’s Final Protection plan).
The trick in these plans is, like all permanent plans, the benefits of these perks are better the younger you buy. Though interestingly, that can also diminish the value of the cash-in option, so it’s wise to decide ahead of time which of the options (Reduced Paid-Up or Cash-In) you’re going to need, because you can’t maximize the benefit of both.
How Do These Plans Differ?
While both plans offer the Reduced Paid-Up and the Cash-In benefits, 100% Pure Evolvement offers a third perk that 100% Pure Protection doesn’t: your premiums are reduced over the first 10 years. The difference is made up on years past the first 10, which could spell a difficult plan for lower income earners, but a viable one for professionals or as part of a layered insurance plan – as this feature makes it easier to pop on a Term 10 option to cover a mortgage or other debts.
How Do You Know This Plan Is Right For You?
Price, as always, rules the day when deciding on a plan, so you’re still encouraged to shop around.
However there are a few cases in which to consider the benefits that La Capitale’s Pure Series provides:
- You’re looking for long-term protection and final affairs coverage;
- You want to set aside a cash-flow for the future but you don’t want to invest in your insurance;
- Retirement demands you keep your budget tight, and you’re willing to plan well in advance to aid in that;
- For Pure Evolvement: You’re layering your insurance and want to smooth out the pricing and avoid a hefty early bill.
While we can’t say for certain that La Capitale’s benefits on the Pure Series actually makes permanent life insurance a more attractive option – we can certainly appreciate that insurers recognize that price is an issue with these plans. With a little more flexibility in a permanent plan, however, taking the plunge on one isn’t as huge a commitment as it has to be.