In most good financial plans, it is important to not just grow assets, but also to protect them. One way to accomplish this is through the use of life insurance. This essential financial tool can allow a person’s loved ones to pay off debts such as a home mortgage or credit card debt should the insured pass away. It can also be used to supplement income for a family who has lost a breadwinner due to an unexpected or untimely passing.
Term life insurance is the most popular choice for policyholders, but whole life should always ben considered. If you have any questions about permanent coverage, keep reading.
Unlike term life insurance, whole life insurance policies are a little more complicated. There are a few more pieces of the puzzle you’ll need to understand to ensure you’re getting the most out of your coverage.
How Whole Life Insurance Works
Whole life insurance can literally span throughout the entire lifetime of an insured. Unlike its term insurance counterpart that expires after a set number of years, a whole life policy will remain in-force as long as the premium continues to be made. Whole life insurance may also be referred to as ordinary life, straight life, or permanent life insurance.
In addition to death benefit protection, whole life insurance also offers a cash value component. Here, funds can build up tax deferred – and can be borrowed or withdrawn.
Should a whole life insurance policyholder remove funds from the policy’s cash value, repayment of this money is optional. However, if the insured were to pass away while there is still a cash balance due; the amount of unpaid cash will be subtracted from the death benefit proceeds that are paid out to the policy’s beneficiary.
In this manner, whole life insurance can really serve two distinct purposes. First, it works as a protection product for the insured’s beneficiaries. In addition, it can also serve as a type of financial investment for the policyholder.
Because a whole life insurance plan also offers a cash value portion, coverage is going to be more expensive.
Yet, over time, while an insured who owns term life coverage may need to renew at a higher premium rate, a whole life insurance policyholder will retain the same premium expense throughout the entire life of the policy.
Why Buy Whole Life Insurance
There are several advantages to purchasing a whole life insurance policy. These may include:
- Build-up of cash value. The cash value that is built up inside of a whole life insurance policy can never decrease in value – unless the policyholder borrows or withdraws these funds. Therefore, over time, these funds can become quite substantial. It is important to choose an insurer with a high rating for financial stability.
- Tax advantages. Life insurance policies offer unique tax advantages among financial products. Just as with an Individual Retirement Account (IRA) or 401(k) account, the funds are tax deferred. None of the gains within that account will be taxed until the funds are actually withdrawn.
- Dividends. Some whole life insurance policies also pay out dividends to the policyholder. These funds may be taken in the form of a direct check, or they can be reinvested into the cash value of the plan. Alternatively, dividends may also be used to purchase “paid-up additions” – or additional insurance – in order to provide the insured with a larger amount of death benefit.
- Coverage for one’s whole life. Certainly, as its name implies, whole life insurance will provide coverage throughout the whole of a policyholder’s life. This can help to provide peace of mind in knowing that coverage will never run out, as long as the policy’s premium continues to be paid.
Where To Get Whole Life Insurance Quotes
Whole life insurance policies may be purchased from licensed insurance agents and financial advisors. These plans may also be obtained by contacting an agent or insurer via the telephone, as well as through online life insurance sources.
Just as with any other type of financial or insurance product, it is important to determine why the coverage is being purchased, and how it will fit in with other monetary related goals. This will help a policyholder to best utilize his or her coverage in ensuring that financial needs are met.
Because of its long lasting nature, a whole life insurance policyholder will never find himself or herself without a life insurance plan – regardless of how long they need the coverage or any adverse health conditions that they may acquire over time.
When it comes to whole life insurance policies, the quotes for coverage can be all across the board. If you get a dozen quotes yourself, you’ll spend hours getting rates which could be hundreds of dollars difference.
Whole life insurance is going to have higher premiums than a term plan, but it doesn’t mean your rates have to be through the roof. It’s important you find a company which offers cheap whole life insurance policy. The lower the rates you get now, the lower your rates are going to be in the future.
Don’t waste your time on the phone with an agent just to get a useless expensive quote, we can do the work and gather all of the quotes for you.
What Are Your Next Steps to Whole Life Insurance?
All of this information about whole life insurance can be confusing. If you’ve decided you want to buy whole insurance, you might be wondering what you should do next.
It’s simple – find an independent broker to work with. When you’re dealing with permanent insurance, you want to find a policy which is affordable and has the benefits you want.
That can be an exhausting search. Instead of doing this work, you can save time by making one single phone call. One call and you’re done.
You should use an independent agent. We suggest this to everyone we talk to, even if they decide not to use us.
For more kinds of coverage, check out our list of Types of Life Insurance.