In 2017, 60% of life insurance policies sold were for whole life insurance. Are you looking to get insurance but want to first know the advantages of whole life insurance?
This article will define some of the many benefits of whole life insurance and why you won’t want to miss out. Read on to discover why so many choose this insurance and how it can give you peace of mind.
What Is Whole Life Insurance?
Whole Life Insurance is a permanent coverage option for your entire lifetime. As long as the premiums are paid and current, the protection lasts until the date the insured passes. 1 in 5 people who have life insurance say they don’t have enough, don’t let that be you.
Types of Whole Life Insurance
The reason someone takes out a whole life insurance policy varies from person to person. One reason people choose this insurance is because of large payouts. The death benefits protect beneficiaries when the person who was insured passes.
Another reason is for access to funds. It’s treated as savings for retirement and emergencies. One last common reason is for meeting expenses. The payout and cash value of the policy are used for different expenses, whether expected or not.
The cash value portion of the premiums is reinvested into sub-accounts. Your accrued value grows based upon how each sub-account is growing. You can make withdrawals from this option. The rate of accumulation does vary.
Part of this premium goes into a cash-value account, and the policyholder can borrow from and access it. Money in this account is tax-free. The borrower doesn’t need to repay loans from this account. Any amount not paid is deducted from the final payout.
This option is great for unforeseen emergencies such as needing to go to the hospital. Some use it for retirement income.
These policies normally don’t require medical underwriting, so the premium isn’t affected by your health. This policy often has the medical exams waived.
This premium increases over time. As your income grows, your premium does as well. This is a great option for younger-aged consumers who currently have a lower income.
A sum is collected ahead of time instead of a fixed monthly premium. The premium can be a large amount since it’s upfront. You don’t have to worry about missing a premium with this option.
Survivorship is different since it covers 2 individuals instead of just 1. The beneficiary will receive the payout after both of the insured pass away. If only one of the policyholders dies then the policy is still active.
Who Should Get Whole Life?
Whole Life is great for almost any person who wants lifetime coverage. Of course, not everyone needs full lifetime protection so it’s important to decide whether you need it or not since there are many benefits.
1. Never Expires
When you purchase Term Life Insurance, it’s only for a set amount of time, whereas whole life insurance never expires. Term Life once the set time is up, the protections are over unless you switch to a permanent insurance plan.
Whole life insurance will protect you for your entire life, so you don’t have to worry about expiration dates.
2. Builds Your Savings
When you have this policy, part of it goes toward building its cash value over time. You also have the option to borrow against the cash value of the policy. This is a sure way to build your savings.
3. Additional Income
You can exchange whole life coverage for an annuity that’ll pay out a steady income for your entire life. This exchange won’t cause taxation either. Before doing this always speak with a tax expert or financial consultant first.
4. Long-Term Care
Since your policy builds value over time, you can use the cash value to pay for long-term care. This is dependent on your paid premiums.
5. Security for Your Beneficiaries
Nothing is a more startling thought than your loved ones worrying about how to pay for different expenses after your passing. When you pass away your whole policy will pay your beneficiaries. This also won’t expire either as long as the premiums are current.
6. Protection of Value and Growth
This policy isn’t affected by stock market changes. This policy’s cash value grows at a fixed rate not related to the stock market’s climbs and decreases.
7. Supplements Your Retirement
These policies are a great way to fund your retirement. You could be able to use your cash balance as a tax-free option when you’re older.
8. Cash Value
Sometimes you’ll need to surrender your policy for a cash value. This could be due to chronic illness, the immediate need for cash, losses in investments or your business, etc.
Converting Term Life to Whole Life
Most insurers allow converting a term life policy into a whole life. Some reasons this could be allowed are:
- The insured includes a trust
- Policyholder wants tax-free investment options
- The policyholder wants to set up an estate
- The policyholder wants to continue coverage but term life doesn’t allow it
If you choose to convert to whole life you’ll then receive extended coverage and build up cash value for future borrowing purposes.
Reviewing the Advantages of Whole Life Insurance
After carefully reviewing the advantages of whole life insurance and the many types, you can determine which policy is right for you depending on your age, health, income, etc.
Are you ready to be covered for your insurance needs? Contact us today and we will discuss what insurance is the best option for you.