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.
Today, there are two primary types of life insurance – term and permanent – and within each of these categories are many additional policy variations. One of the oldest forms of permanent life insurance is whole life.
Life insurance is one of the most important investments that you’ll make for the future of your family. It’s vital that you buy the best plan to fit your needs. There are dozens of different factors that you’ll need to consider to make sure that you’re buying the best plan. It can be an overwhelming and frustrating process, but we are here to help.
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. This article is going to explore the different components of whole life insurance and give you the info you need to make an educated decision about your life insurance 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 Here, funds can build up over time on a tax deferred basis – and can be either borrowed or withdrawn by the policy holder should he or she need the cash.
Should a whole life insurance policy holder 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 policy holder.
Because a whole life insurance plan also offers a cash value portion, the premiums for this type of coverage are typically higher than the premiums on a term life insurance policy that has a comparable amount of death benefit.
Yet, over time, while an insured who owns term life coverage may need to renew at a higher premium rate, a whole life insurance policy holder will retain the same premium expense throughout the entire life of the policy.
These are a great option for anyone that doesn’t want to worry about reapplying for life insurance coverage in the future. As long as you continue to pay the premiums on the plan, you’ll have life insurance coverage. A lot of applicants don’t like the idea that they will lose coverage, and whole life will ensure that it doesn’t happen.
Why Buy Whole Life Insurance
When you start shopping around for life insurance, you’ll notice there are several different kinds of plans. Each of them offers different benefits and drawbacks.
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 policy holder borrows or withdraws these funds. Therefore, over time, these funds can become quite substantial. With this in mind, 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 within a whole life policy’s cash value component will grow on a tax deferred basis. This means that none of the gain within that account will be taxed until the funds are actually withdrawn.
- Dividends. Some whole life insurance policies also pay out dividends to the policy holder. These funds may be taken in the form of a direct check, or they can be reinvested into the cash value component of the policy. 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 policy holder’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 policy holder to best utilize his or her coverage in ensuring that financial needs are met.
Because of its long lasting nature, a whole life insurance policy holder 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.
The best way to get affordable whole life insurance is to work with an independent insurance agent, like ours. Unlike a traditional insurance agent, our agents work with dozens of excellent insurance companies across the nation. We can bring all of the best policy rates directly to you.
There are hundreds of insurance companies that you can choose from, which means that you could spend weeks calling different insurance agents to find the best plan to fit your needs at an affordable price.
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, let one of our agents do the work and gather all of the quotes for you.
How Much Life Insurance Do You Need?
Aside from getting a quality insurance plan, it’s vital that you get enough coverage to protect your loved ones. If you didn’t get enough life insurance, your loved ones would have leftover debts and no money to pay for those bills. Before you apply for any policy, it’s vital that you calculate your insurance needs. There are several different factors that you should consider to determine your life insurance needs for your family.
The first thing that you should look at is your debts and final expenses that you would leave behind to your family members. The primary goal of your life insurance plan is to give your loved ones the money that they need to pay off any debts without being left with a mountain of debt.
The next thing that you should look at is your annual salary. The secondary goal of your life insurance is to replace your paycheck if something tragic were to happen to you. If you’re one of the main income earners in your household, the would struggle without that source of income. If you want to give your family the protection that they need, you’ll need to get seven to ten times your annual salary.
Term Life Insurance
For a lot of people, a whole life insurance policy is going to be the best choice for getting the protection that your family deserves. If a whole life insurance plan doesn’t work for you, there are plenty of other options. If you’re looking for the most affordable life insurance plan, a term insurance plan is going to be the best option for you. There are plenty of advantages and disadvantages that you should be aware of when you’re looking to get life insurance protection.
Because term life insurance plans aren’t a permanent form of coverage like a whole life plan, they are going to be much more affordable. When you purchase a term life insurance policy, it comes with an expiration date. You can purchase one of these plans in a variety of lengths, anywhere from a two-year term, to a thirty-year term. After that time is up, the life insurance plan is no longer active, which means that you’ll have to reapply for life insurance coverage to get the protection that your family deserves.
It’s important that you get the best insurance plan that fits your family’s needs. If you didn’t have life insurance, it could leave your loved ones with a massive amount of debt and no money to pay off all of those bills. Because you never know what’s going to happen tomorrow, you shouldn’t wait any longer to get the life insurance protection that they deserve.
If you have any questions about whole life insurance, or about any of the other possible options, please contact one of our agents today. We would be happy to answer those questions and ensure that you’re getting the best policy to meet your needs. Our agents have years of experience working with applicants to ensure that they get a quality and affordable life insurance plan.
Our agents know the ins and outs of whole life insurance. We can walk you through the process of making the tough decisions and help connect you with the best plan to meet your needs.