A Little Bit About Whole Life (part one)

When it comes to life insurance, it’s pretty hard to beat the benefits of Whole Life Insurance.

Permanent Life Insurance

Whole life insurance is also known as “permanent” life insurance or “traditional” life insurance. It is one of the few policies that lasts for the entire life of the insured (as long as the premium is paid). In addition to paying a death benefit, whole life insurance also has a cash value component, which has several benefits.

Some of the Benefits of Whole Life

Here are some things to consider when purchasing whole life insurance:

  • Whole life insurance lasts for a policyholder’s lifetime, as opposed to term life insurance, which is for a specific amount of years.
  • Whole life insurance is paid out to a beneficiary or beneficiaries upon the policyholder’s death, provided that the premium payments were maintained.
  • Whole life insurance pays a death benefit but also has a savings component in which cash can build up.
  • The savings component can be invested; additionally, the policyholder can access the cash while alive, by either withdrawing or borrowing against it, when needed.
  • When a loan is taken out against the cash value of a whole life insurance policy, it generally doesn’t involve a credit check.

Why is Cash Value Important?

While the death benefit is the most important aspect of whole life insurance (because it never goes up in price, and will be in place for the rest of the insured’s life), cash value is one of the key components of a whole life policy. The balance grows tax-deferred, and has many uses, depending on the coverage that you purchase. Some use it to finance college courses, pay off debt, and some leave it alone, letting the cash value help the death benefit grow. If you would like to schedule a call to learn more, just click here or you can leave a comment or contact me here.