Which of the following is an advantage of permanent life insurance?

Permanent life insurance offers several significant advantages, each contributing to its value as a financial product.

One of the primary benefits is that the death benefit proceeds are generally free from federal income tax, which ensures that the beneficiaries receive the full amount intended without reductions for tax obligations. This can provide financial security and peace of mind to policyholders and their loved ones.

Additionally, permanent life insurance features tax-deferred cash value accumulation. As premium payments are made, a portion goes toward building cash value, which grows over time without being subject to immediate taxation. This feature allows policyholders to accumulate savings within the policy that can later be accessed through loans or withdrawals, providing flexibility for future financial needs.

Furthermore, the cash value accumulated in a permanent life insurance policy is typically protected from creditors in many jurisdictions. This means that, in the event of bankruptcy or legal judgments, the cash value can remain secure, providing an extra layer of financial protection.

Considering these aspects, it is clear that all these benefits highlight the comprehensive advantages of permanent life insurance, making it a valuable aspect of financial planning.