Advantages Of Whole Life Insurance
Premiums are usually leveled and can be paid for life: To be able to pay less expensive annual premiums, you must ideally purchase a whole life insurance in the US when you are still young. The more you keep putting off your purchase, the more the chances that you will have to pay a higher premium.
However, there are also certain insurance providers who allow you to have shorter premium payment periods like 15 years or a one-time payment.
Cash value guarantee: Some of the money that you pay into your whole life insurance policy accumulates as guaranteed cash values. At any point if you choose to surrender the policy, you will still get the cash values. You may also borrow against them as a policy loan at the current policy loan interest rate for as long as your policy is active.
How much guaranteed cash value you receive depends on the kind of whole life insurance you have bought. Your plan’s premium amount and duration also decides the cash value you will get. Under the current federal income tax law, the growth in cash value is tax deferred. The death benefits get reduced by the borrowed amounts and also the cash surrender value.
Dividends: The policy is capable of earning dividends. These dividends occur when your actual life insurance costs turn out to be less that what you have assumed in setting your premiums. Certain insurance providers may even return a portion of your life insurance premium to you as dividend. However, dividends are not guaranteed since these insurance providers don’t know their actual costs in advance.
Is a whole life insurance worth the investment?
A whole life insurance works like a protective blanket. With a whole life insurance you will make reasonable monthly, quarterly or annual payments for the whole length of your insurance policy. If and when something happens to you, you can still take care of your family with the benefits that you receive.
If you have a proper investment plan you will find that your other investments are helping pay your insurance premiums. Things will most likely turn out fine after you retire, and then, at the end of your insurance term, you will find your whole life insurance benefits a welcome addition to your financial resources. So, either way, you win!