Whole life insurance is a type of policy that provides more than death benefits to your dependents. With whole insurance, you can accumulate cash value as well with the policy. This can be a sound option for a person with limited investments and who wants to build up funds that can be accessible during his lifetime.
Time Frame
Unlike term life insurance, you will not have an expiration date on your policy. You will maintain coverage as long as you continue to make the premium payments. You do not need to worry about conversion or renewability when you take out a whole life insurance policy.
Cost
The cost of a whole life insurance policy can be very affordable, especially if you take out the policy in your youth. The older you are, the higher your premiums will be. Premiums for a whole life insurance policy are typically not adjustable and will remain the same each year as long as you don't default on payments. However, you can change how much you pay on a whole life insurance policy by changing your premium payment schedule. Companies may offer a 15-year premium payment period or a one-time payment option.
Considerations
Dissimilar to many term life insurance plans, you can earn dividends on a whole life insurance policy. Dividends are awarded when you pay more than the actual cost of the insurance. There is no guarantee on dividends, but you do have the potential to receive a check in the mail from your insurance company.
Benefits
Whole life insurance gives you the option to build up guaranteed cash value. A portion of each of your premium payments will be put aside and available for withdrawal. You will have the ability to get the cash if you give up the policy or you can choose to borrow against the funds in the plan. The longer you have the whole life insurance policy, the more cash you will build up.
Potential
Whole life insurance will not allow for as much flexibility as a universal life insurance plan. Universal life plans permit you to change your coverage amount based on your current needs. You will also earn tax-deferred interest on the money you put into the account.
Member Comments