There are two main types of life insurance coverage: term and permanent. Permanent insurances cannot expire while term life insurance can.
There are several permanent life insurance policies but, whole life insurance is the most usual type of permanent life insurance that helps protect your family’s future as well as your current financial situation. A whole life insurance policy offers two main advantages which are a guaranteed death benefit paid to your beneficiaries upon your death, as long as you continue to pay your premiums, and a cash value that can be withdrawn or borrowed while you are alive.
Why Is A Whole Life Insurance A Good Choice?
Whole life insurance is the most usual and most simple permanent life insurance coverage that exists on the market. Premiums for this type of insurance are higher than with term life insurance policies, but it provides a large number of benefits, such as:
- Premium this life insurance is permanent: this means that the premium never increases due to years based on your age. If you purchase this type of policy when you are young and healthy your premium will be as low as than when you purchased it
- There is a cash value you can build: it has a tax-deferred policy that can grow every year which means you don’t need to pay tax until you claim their gains. However, policyholders may pay more than expected premiums. Policy dividends can also be reinvested in cash value and earn interest. Cash value provides policyholders with a livelihood advantage. Dividends and interest earned on the cash value of a policy over time typically provide investors with a positive return above the total premiums paid to the policy.
- Guaranteed death benefit: with whole life insurance payout of the face value is certain
- You can borrow cash without a credit check
- You can withdraw money from your policy
- With this policy you can fund your retirement: if you had time to build up your cash value you can use it as a part of your retirement financial benefit
- You can earn dividends: quite an amount of life insurance companies pay dividends so you can use them as cash to pay for your premium for example or reinvest them in their policies
- There are several tax advantages: such as tax-free death benefit
- Premium flexibility: if you can’t pay premiums due to your financial situation you can use your cash value to cover the costs and maintain your policy
- With this type of policy, you know what you’re getting: locked-in premium, fixed interest rate, and cash value (if it doesn’t come to a change of terms)
- It is simpler than the other permanent life insurance policies
Should I Purchase Whole Life Insurance?
Whole life insurance has its benefits based on several individual factors. In most common cases people buy life insurance to protect their families in case of a death. But, it also may be a good choice for business owners because if you have insurable interest you can purchase a policy for someone else, like a business partner whose unexpected death could jeopardize your financial status. Also if you looking for tax-free investment opportunities whole life insurance is a good choice for you because of the cash value benefits and dividends this insurance provides.
Whole life insurance is also a safe choice for those who need long-term care because this rider allows you to access some or all of your policy’s death benefits to cover long-term care costs not covered by your health insurance while you were alive. Note that prices and conditions vary by the insurance company.
If you are supporting life-long dependents you might also consider this type of coverage. Following the death of a parent, family members may need substantial financial support to cover medical bills and daily expenses. In this case, life insurance is a good idea. Not only do these policies have guaranteed payouts upon the death of the policyholder, but they also create a cash value account with a guaranteed interest rate that can be used for quick fluidity.
However, when you are deciding to purchase whole life insurance you also need to consider how much it will cost you. Costs depend on several factors such as age, health, lifestyle, living area, occupation, type of whole life insurance policy, etc.
Like with all other insurance policies, the younger and healthier you are when you decide to purchase, the lower costs will be. Your costs can also depend on the fact if you smoke or not. A non-smoker will pay less for the same policy, than a person who smokes. Approximately, for healthy adults, costs will be 75 bucks a month for 25 thousand dollars insurance policy, and for smokers will be about 90 $ for the same policy.
If you have a terminal illness you can qualify for a guaranteed issue final expense whole life insurance policy which means that you can pay for lower coverage maximums.
Is Whole Life insurance A Good Choice For Me?
Even though premiums are much higher than with term life insurance, this type of insurance is a safer investment in the long run. It provides life coverage, so it is a lifelong decision. It is best for people with permanent financial needs, but it is also a commitment so before you decide to purchase you should consider your life insurance needs first. If you have temporary needs rather than long-run needs it might not be the right fit for you. It should be your personal choice based on several factors so you need to check out all your personal needs before you choose the right option.
However, our agents in the Better Place Insurance Group are here to answer your question first. This is a big life decision so you don’t need to rush into anything. Call us today and our experienced agents will help you with all your needs and help you find insurance that best suits your needs and your budget!
Experienced Insurance Advisor and financial planner. Graduated from Webber International University with a Bachelor of Science in marketing and a Masters in Business Administration. Skilled in Public Speaking, Team Building, Management, Marketing, Direct Sales, and Strategic planning.