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Although there are many different types of life insurance available, the majority of Americans choose whole life insurance for good reason. Whole life insurance policies offer numerous advantages.
Lifetime Coverage Unlike term life insurance which only covers you for a specific time period, whole life insurance protects you for the rest of your life. Therefore, if you have a steady income, you can enjoy peace of mind by purchasing a whole life insurance policy. Steady Premiums & Guaranteed Death Benefits Many policy holders choose whole life insurance because of guaranteed rates which normally remain in effect until insurers die or cancel their policy. This is often much cheaper than term life insurance premiums which tend to increase every time policy holders renew their policy. Although certain policies will include increasing rates, the specific increases will be outlined in your contract at the time of purchase; thus eliminating any unwelcome surprises. In addition, you can be guaranteed that the death benefits of your whole life insurance policy will remain the same so your loved ones will be financially protected when you die. Borrow Money Using the Cash Value If you purchase a whole life insurance policy, you can borrow money against the cash value as collateral as the value increases. This enables you to use the money, while still retaining coverage with your insurance policy. However, you need to bear in mind that the death benefits may decrease if your debt is still unpaid at the time of your death. Investment Potential with Whole life insurance Unlike a term policy where you lose all of the money you pay into it, a whole life insurance policy enables you to build cash value. A portion of your premium is invested into the company so you become a shareholder. The amount of money in your account continues to grow and is called the cash value of your policy. You can stop payments on your policy and withdraw the cash value, but continue to hold a percentage of the death benefits called “paid up insurance”. Another option is to cancel your whole life insurance policy and withdraw the cash or use it to purchase a different type of life insurance policy. As you can see, you have various options with whole life insurance. Flexible Payment Options Continuous Premiums – These premiums remain constant and must be paid for the rest of your life. This is the most popular type of whole life insurance policy because the cash value continues to increase. Limited Payments – You only pay premiums for a designated number of years, and the amount of your premiums is specified in your policy and will never increase. However, the cash value of your whole life insurance policy will continue to increase. Modified Premiums – You pay increasing premiums over a certain time period, after which they will remain constant. The specific amounts are outlined when you first purchase your whole life insurance policy. Because the amount of your benefits remains constant, you can purchase a larger policy. Single Premium – You pay one single payment which results in an immediate cash value. With this type of whole life insurance policy, your death benefits remain constant. If you want to set aside a percentage of your income to protect your family, this is a good option. Additional Whole life insurance Options With whole life insurance, you may have other options available such as term riders. These enable you to add temporary policies for a short time period. In addition, you may be able add another individual to your existing policy if your insurance company offers spousal or child riders. It can be difficult deciding what type of life insurance to purchase. Don’t be afraid to contact us or to visit your local insurance agent if you have questions. You can then decide if whole life insurance offers you the type of coverage you need for you and your family. |
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