Whole Life Insurance Overview
Whole life insurance is a policy often described to be permanent in nature. It offers a reliable coverage that can last a policy holder’s entire lifetime. Aside from guaranteed risk protection against death, whole life insurance policies feature an investment component which slowly builds cash value overtime. What makes whole life insurance attractive to a lot of people is that death benefits are guaranteed to be cashed out to the beneficiaries regardless of when they die. Since whole life insurance products run through an individual’s entire lifetime, insurance providers generally cash out the proceeds tax free.
In essence, whole life insurance is suitable to be purchased to serve the following purposes:
• Risk protection that will last for a lifetime
• Excellent source of traditional risk protection
• Great investment vehicle if you borrow against standing cash value
• Ideal for estate planning needs
• Highly recommended for those looking to perform charitable giving activities on the long haul
One feature that can only be found in whole life insurance products is that of level premiums. For higher life insurance rates, policy holders are guaranteed that their premiums will never change thus they are more likely to pay for their monthly premiums on time and without fail. But in these financially-challenged times, it is rather more sensible to choose term life insurance policies. However, if you really are determined to purchase whole life insurance, here are all the facts that you should know about this permanent life insurance product:
When do you need to seriously consider whole life insurance?
• You would like to take advantage of more tax-deferred savings than what you currently have under your name
• You do not intend to use the savings as well as cash value in your life insurance for the first ten years or so
• Your present job and/or income allows you to pay expensive premiums for the widest coverage
The main motivation of most policy holders opting to transfer from term life to permanent life is the cash value feature. Since a portion of the premium goes to investment vehicles, policy holders can expect a substantial amount of money that they can take out as form of a loan or additional benefit that will be cashed out to beneficiaries after the policy holder’s untimely demise.
The benefits of taking out a whole life insurance policies
• The annual premium rates do not increase at all
• You can enjoy a policy that will last you a lifetime. No need to bother checking into a renewal period as there is no such thing as this is permanent life insurance
• You may choose to take out the cash value even prior to your death. The cash value serves the purpose of being a retirement fund for many of its policy holders
Actual advantage of a whole life insurance policy
• Make money without having to open a personal banking loan
By funding your personal infinite banking system in an established whole life insurance setting means gaining full control of where your money should be invested on to provide maximum income. By placing a portion of premiums towards income, policy holders gain interest on the cash value stated against the policy. With this type of investment, policy holders also gain the skill to recapture the interest and place them on more sensible investment vehicles too.
• Premium payments will never increase
Although term insurance policies are known to be cheaper, they are not ideal as a long-term risk protection instrument. If you really want to know about how to save on life insurance policies, look at the premiums expected for permanent life insurance customers!
If you are living an unhealthy lifestyle and is currently suffering from a chronic disease, you are most likely get higher premiums with term life insurance. To avoid this problem you are required to choose whole life as actuaries guarantee no rise on premiums despite advancing age or deteriorating health condition.
• Guaranteed cash value and death benefits
What makes a whole term life insurance policy an ideal insurance product is that no matter how bad your chosen investment vehicle fairs on the market, you are rest assured of an increasing amount of cash value and guaranteed death benefit f for your family after you die.
One smart strategy on how to pick life insurance is to choose whole life over term if you are looking into opening an account under your name which functions as from of savings that will not depreciate in terms of value on the long haul.
• Tax Advantage
Other forms of investment can only do so much as to defer the payment of taxes. In the case of 401k investments, you will still be required to pay taxes when you decide to withdraw the funds. In terms of whole life insurance, you will be paying premiums after-tax dollars. This only means that the cash value increases without getting taxed at the same time. You are sure to get all the gains from the investment without having to worry about any form of costs or taxation with a whole term life insurance policy.
So you see, a whole life insurance not only covers for financial losses that your family will encounter in the event of your death, but also enable you to grow your money that you can use in the future or simply put away for a better and more finically stable life for your loved ones.