Ally Permanent life insurance is a type of life insurance policy that provides lifetime coverage as long as premiums are paid. It differs from term life insurance, which only provides coverage for a set period of time, usually 10 to 30 years.
The key difference between permanent and term life insurance is that permanent life insurance policies accumulate cash value over time that the policyholder can access while still living. Term life insurance only pays out if the insured dies during the coverage period.
There are several types of permanent life insurance:
-
Whole life insurance – Provides lifetime coverage, fixed premiums, and a minimum guaranteed cash value that grows over time.
-
Universal life insurance – Offers flexible premiums, adjustable coverage, and cash value accumulation based on current interest rates.
-
Variable life insurance – Allows investment of cash value in a variety of subaccounts for potential growth while maintaining a death benefit.
-
Variable universal life insurance – A hybrid policy with flexible premiums and adjustable coverage along with investment options.
The key advantage of permanent life insurance over term is that it provides lifelong coverage that does not expire after a set term. This ensures you have death benefit protection throughout your life. The cash value accumulation can also be used while living for things like supplement retirement income or college costs. However, permanent life insurance premiums are typically higher than term insurance.
How Does Permanent Life Insurance Work?
Permanent life insurance policies provide lifelong coverage as long as premiums are paid. Unlike term life insurance, permanent life insurance has a cash value component that grows tax-deferred over time in addition to the death benefit. There are several key aspects to understand about how permanent life insurance works:
Premiums – Policyholders pay a monthly, quarterly, or annual premium to keep the permanent life insurance in force. A portion of the premium goes toward the death benefit coverage, while the remaining portion goes toward building cash value.
Cash Value – The cash value account grows tax-deferred based on interest rates and dividends from the insurance company. This provides a savings and investment element in addition to life insurance coverage. The cash value belongs to the policyholder and can be accessed through withdrawals, loans, or by surrendering the policy.
Death Benefit
The death benefit is the amount that beneficiaries receive if the insured passes away. It remains level and does not decrease over time as long as the policyholder continues to pay premiums.
Dividends – Some permanent life insurance policies pay dividends, which are a portion of the insurance company’s profits. Dividends can be taken as cash, used to purchase additional coverage, or added to the cash value where they earn interest.
Loans – Policyholders can take out loans against their cash value at competitive interest rates, leaving the death benefit intact. Loans don’t require credit checks or repayment schedules. If loans remain unpaid at the time of death, the balance is deducted from the death benefit.
Withdrawals – After the first few policy years, cash value can also be accessed through withdrawals. However, withdrawals decrease the death benefit if over a certain limit per year. Withdrawals may also be taxable.
In summary, permanent life insurance provides lifelong protection, tax-deferred savings, and access to the cash value through loans and withdrawals if needed. This gives policyholders financial flexibility and stability.
Benefits of Permanent Life Insurance
Permanent life insurance offers several valuable benefits that make it an attractive option for many policyholders. Here are some of the key advantages:
Lifelong Coverage
One of the biggest benefits of permanent life insurance is that it provides lifelong protection as long as you continue paying the premiums. Unlike term life insurance, which only covers you for a set period of time, permanent life insurance allows you to lock in coverage that will last throughout your lifetime. This means your loved ones will receive a death benefit no matter when you pass away. For many, this lifelong coverage provides invaluable peace of mind.
Cash Value Savings and Growth
In addition to the death benefit, permanent life insurance also builds up a cash value savings component that you can tap into while alive. A portion of each premium goes toward building this cash value, which grows on a tax-deferred basis over time. The cash value earns interest at a rate set by the insurance company, allowing it to grow steadily. Policyholders can borrow against this cash value through policy loans for major expenses or financial needs.
Fixed Premiums
Most permanent life insurance policies offer fixed premiums that remain level throughout the life of the policy. This allows you to lock in a predictable rate and avoid premiums rising as you age. Knowing your premium amount will stay the same each year makes permanent life insurance easy to budget for.
Drawbacks of Permanent Life Insurance
Permanent life insurance tends to have some notable drawbacks compared to term life insurance. The main issues are:
-
Higher Premiums Than Term Insurance – Permanent life insurance premiums are significantly higher than term life premiums, often 5-15 times higher for the same amount of coverage. This is because permanent life combines death benefit protection with a savings or investment component. So you are paying for more features. Still, the higher premiums make it less affordable for some families.
-
Less Death Benefit for the Premium – Due to the savings element, permanent policies provide less pure insurance coverage per premium dollar compared to term. For example, a $100 monthly permanent life premium may provide $250,000 in coverage, whereas a $100 term life premium may provide $500,000 in coverage. The tradeoff is permanent policies last lifelong whereas term expires.
-
Low Cash Value Growth – The cash value account within permanent life grows at a relatively modest, fixed interest rate, typically 2-4% annually. This is usually much lower than the average stock market return, meaning the policyholder sacrifices significant growth potential in this part of the policy. However, the cash value does grow tax-deferred.
So permanent life insurance tends to cost more, deliver less death benefit per premium dollar, and offer more conservative cash value growth compared to alternatives like term insurance and normal investment accounts. These tradeoffs make it less optimal for some policyholders, especially those looking to maximize pure insurance protection.
Who Needs Permanent Life Insurance?
Permanent life insurance is designed to provide lifetime protection. Here are some of the main groups who can benefit from permanent life insurance policies:
Young People Who Want Lifetime Coverage
Permanent life insurance can make sense for young adults who want to lock in lower premiums early in life. Getting coverage when young and healthy can secure more affordable premiums that will remain level for life. This gives the policyholder lifetime protection that does not expire after a set term.
Permanent policies also build cash value that the policyholder can access later in life through policy loans and withdrawals. So they function as forced savings plans in addition to providing death benefits. The earlier someone starts a permanent policy, the more time cash value has to accumulate.
People Who Want to Leave a Legacy
Permanent life insurance is a way to create an instant estate for your heirs. The death benefit payout can give your beneficiaries the funds they need to cover expenses, pay off debts, and continue living comfortably without your income.
The cash value built up in a permanent policy is also inheritable. So permanent insurance can leave a financial legacy beyond just the death benefit alone. This makes it a key part of estate planning for many individuals.
People Who Want to Use Life Insurance as an Investment
The cash value within permanent policies grows on a tax-deferred basis. This allows the funds to compound without being taxed each year like other investments. The cash value can be borrowed against or withdrawn (with limits) to help supplement retirement income or pay for large expenses.
Some permanent life insurance policies offer dividends that can be taken as cash. The policies also provide guaranteed growth rates for the cash value. This makes permanent life insurance an attractive long-term investment in addition to income protection.
Ally Permanent Life Insurance Options
Ally offers several types of permanent life insurance policies to choose from:
Whole Life Insurance
Whole life insurance provides lifetime coverage as long as you continue paying the premiums. It has a level premium that does not increase with age.
Some key features of Ally’s whole life insurance:
- Guaranteed death benefit amount
- Cash value accumulation
- Dividends can be taken as cash or used to purchase more coverage
- Coverage available up to $5 million
A sample whole life policy from Ally:
- $250,000 coverage
- 30-year-old female non-smoker
- $150 monthly premium
Universal Life Insurance
Universal life insurance also provides lifetime coverage with flexible premium payments. You can pay the minimum required to keep the policy active or make additional payments to grow the cash value.
Ally’s universal life insurance includes:
- Adjustable death benefit
- Cash value with interest growth
- Can skip payments if the cash value is sufficient
- Coverage up to $10 million
Here’s a sample universal life quote from Ally:
- $500,000 coverage
- 40-year-old male non-smoker
- $200 monthly premium
Indexed Universal Life Insurance
Indexed universal life insurance has the flexibility of universal life with an interest rate linked to a market index. This allows the cash value to grow more than a traditional universal life policy.
Key features of Ally’s indexed universal life:
- Market-linked interest growth potential
- Downside protection from market losses
- Guaranteed minimum interest rate
- Coverage up to $10 million
A sample indexed universal life quote:
- $1 million coverage
- 50-year-old female non-smoker
- $600 monthly premium
Ally offers competitive permanent life insurance policies to fit your needs and budget. Getting quotes for whole, universal, and indexed universal life is the best way to find the right Ally permanent life insurance option for you.
Ally Permanent Life Insurance Features
Ally offers a variety of features and options to customize your permanent life insurance policy.
Dividend Options
Dividends are payments made to policyholders when the insurance company’s investments perform well. Ally offers several dividend options:
-
Cash Dividends – Dividends are paid out to you in cash. This provides liquidity.
-
Paid-Up Additions – Dividends purchase additional paid-up life insurance. This increases your death benefit over time.
-
Premium Reduction – Dividends lower your annual premium payments. This reduces long-term costs.
-
Accumulate at Interest – Dividends earn interest while remaining with the company. This builds cash value.
Premium Payment Options
Ally provides flexibility in how you pay your premiums:
-
Annual Premiums – Pay one yearly premium for simplicity.
-
Semi-Annual Premiums – Make two payments per year.
-
Quarterly Premiums – Pay every three months.
-
Monthly Premiums – Make small monthly payments through automatic withdrawal.
Riders and Customization
Ally offers optional riders to customize your permanent life insurance:
-
Waiver of Premium – Waives premiums if you become disabled.
-
Accidental Death Benefit – Provides an additional payout if you die from an accident.
-
Children’s Term Insurance – Covers your kids while they’re young.
You can also customize your policy’s death benefit, premiums, and length to suit your budget and needs. Ally’s policies are flexible.
Ally Permanent Life Insurance Ratings
When considering an insurance company, it’s important to look at their financial strength ratings and customer satisfaction. This gives you an idea of their ability to pay out claims, as well as the quality of service they provide.
Financial Strength Ratings
Ally has strong financial strength ratings from the major independent rating agencies:
- A.M. Best: A+ (Superior)
- Moody’s: A1 (Good)
- Standard & Poor’s: AA- (Very Strong)
These high ratings indicate Ally has sufficient financial resources to pay out policyholder claims. Ally maintains strong capital reserves and profitability even during challenging economic conditions.
Customer Satisfaction Ratings
In customer satisfaction surveys, Ally also scores well:
- J.D. Power: 835/1000 in life insurance customer satisfaction (above average)
- BBB: A+ rating with positive customer reviews
The positive ratings and reviews show customers have been pleased overall with Ally’s customer service, claims processing, and value.
Pros and Cons from Reviews
Looking at customer comments, these are some of the commonly cited pros of Ally:
- Competitive pricing and policy options
- Helpful agents and quick application process
- Easy online account management
Potential cons mentioned:
- Limited physical branch locations
- Smaller company compared to giant insurers
- Mixed reviews on claims processing timelines
So while not perfect, Ally Permanent Life Insurance generally receives strong ratings for financial stability, customer service, and overall value. Considering the pros and cons can help determine if they are the right fit.
Alternatives to Ally Permanent Life
When shopping for permanent life insurance, it’s important to consider alternatives to Ally. Here are some top permanent life insurance companies to compare:
New York Life
Founded in 1845, New York Life is one of the largest and oldest life insurance companies in the United States. It offers a variety of permanent life insurance policies with strong financial ratings from AM Best (A++, Superior) and Standard & Poor’s (AA+, Very Strong). New York Life permanent policies offer lifetime coverage, tax-deferred cash value growth, and guaranteed death benefits. Premiums may be higher than some competitors.
Northwestern Mutual
Northwestern Mutual, founded in 1857, is a highly rated mutual company providing permanent and term life insurance. Its permanent policies like whole and universal life offer predictable premiums, cash accumulation, and income tax-free death benefits. Northwestern Mutual has received extremely high ratings from AM Best (A++, Superior) and Standard & Poor’s (AA+, Very Strong). The company is known for excellent customer service and financial strength.
MassMutual
With origins dating back to 1851, Massachusetts Mutual Life Insurance Company (MassMutual) provides permanent life insurance and other financial services. Its whole life, universal life, and variable universal life policies offer lifetime coverage, cash value, fixed or flexible premiums, and income tax-free death benefits. MassMutual has very strong financial strength ratings from rating agencies (A++ from AM Best and AA+ from Standard & Poor’s).
When comparing permanent life insurance options, be sure to look at each company’s financial strength, policy features, premium costs, and overall customer satisfaction ratings. An independent insurance agent can help you evaluate which permanent life insurance company and policy may be the best fit for your budget and needs.
Is Ally Right for You?
When considering permanent life insurance, it’s important to weigh the pros and cons to determine if it aligns with your financial goals and needs. Ally offers competitive permanent life insurance policies with some key advantages:
Pros of Ally Permanent Life Insurance:
- Available for adults 18-80 years old
- Competitive premiums and cash value growth
- Dividends can be taken as cash or used to buy more coverage
- Convertible to universal life insurance up to age 75
- Level premiums locked in for life
Cons to Consider:
- Underwriting required; pre-existing conditions may affect eligibility
- Not as flexible as other permanent policies for changing death benefit
- Limited riders and customization options
Ally permanent life insurance is a great option if you want lifetime coverage with level premiums and tax-advantaged cash value growth. It’s an affordable way to achieve financial security for your loved ones. Those seeking more flexibility may prefer universal life policies.
If Ally aligns with your budget and goals, the next step is to get a quote online or speak with an agent. You’ll go through full underwriting before the policy is issued. Be prepared to provide medical history and records. Once approved, you can activate coverage by paying the first premium.