Whole Life Insurance
At one time, whole life insurance was the only type of life insurance available. In addition to providing life insurance in the untimely event that an adult, parent, or senior citizen dies, a whole life insurance policy also has a savings feature that allows the policyholder and their family to build cash value, or equity, in the policy over the years, accruing a nest egg for retirement.
Though whole life insurance rates are affordable, online quotes show that whole life policies are more expensive when compared to low cost term or universal life insurance. Whole life insurance has many pros and cons, and each consumer must decide if a whole life policy is the right protection for his or her family’s needs. The best way to choose a policy is to get life insurance quotes online and compare rates, coverage and insurance companies to find the best, cheap life insurance available.
Permanent Life Insurance
Term life insurance was developed to provide cheap insurance protection for those unable to afford a whole life policy. While term life policies are temporary and expire after a preset term period, whole life insurance is permanent and remains in effect throughout the insured person’s lifetime. A whole life insurance policy cannot be canceled by the life insurance company and it guarantees payment of the death benefit whether the insured person dies at age 40, 50, 60 or age 90. Whole life insurance rates are fixed and never increase and, in most instances, must be paid up until the insured person dies and files a claim, or decides to withdraw the cash value of the policy.
Whole Life Insurance Cash Value
Part of whole life insurance premiums are diverted to a savings component in the policy called the cash value. Whole life insurance policies guarantee the interest rate paid on the cash value and it grows over time. Some policyholders are also eligible for life insurance dividends, which they can choose either to add to the cash value or get paid out. The predictable growth of the whole life insurance cash value makes it perfect for financial and estate planning, especially for future expenses like college, retirement, a down payment for a home, credit card payments, medical bills, or other debts.
How Much Life Insurance Do I Need?
Choosing how much life insurance you need to buy to take care of your family long term is often one of the most difficult decisions. Life insurance experts recommend 5 to 10 times your annual income, depending on your debts and liabilities. When determining your death benefit and how much life insurance to purchase, consider your mortgage payments, credit card and living expenses, medical bills, personal or business loans, college or education costs, and the financial well-being of your dependents. If you are burdened with a high cost of living, buy a whole life insurance policy with coverage closer to 10 times your annual income.
Remember, buying whole life insurance when you are young and healthy with a clean life style (no smoking) is when consumers will get the cheapest online quotes and rates from life insurance companies. Get whole life insurance quotes to compare rates online and see how much life insurance you can afford.
Whole Life Insurance Pros and Cons
Once the policyholder chooses the death benefit and amount of life insurance, the policy terms cannot be changed, even if the financial needs of the insured person changes over time. Since term life insurance only covers a person for an agreed upon period, the benefits can be changed when new life insurance policies are purchased. One way to overcome this disadvantage is to supplement whole life policies with term life policies when additional insurance coverage is needed.
The other major disadvantage of whole life insurance is the cost. Whole life insurance is not as cheap and affordable term life insurance and universal life insurance. Unlike term life policies, whole life insurance guarantees a payout by the life insurance company because it is a permanent policy and has a cash value, whereas term life insurance expires at the end of the term period, and if the policyholder is still alive, no claim or payout is made. To find affordable whole life insurance, consumers should get free, instant whole life insurance quotes and compare rates between different types of policies and insurance companies to find the best, low cost policy.
Term vs. Whole Life Insurance
Whole life insurance rates are higher than those of term life, at least when the insured person is young. Whole life insurance rates are fixed throughout the life of the policy, but each time a term life insurance policy is renewed or adjusted, the premiums increase to reflect the insured person’s increased age and changes in health.
Though term life insurance is very cheap, term life policies do not accrue any cash value and simply expire at the end of the term. When the savings feature and fixed premium rates of whole life insurance are considered, the cost of a policy over a life time is actually about the same as term life insurance. In the end, which life insurance policy you choose to purchase really depends on your current income, long term financial goals, and which type of coverage best fits you and your family’s needs.
Whole Life Insurance Quotes
To recap, whole life insurance provides permanent life insurance protection and has a cash value which can be redeemed (paid out) or used as collateral for low interest loans from your carrier. The biggest disadvantages of whole life insurance are its lack of flexibility and initial cost, where not every family may be able to afford the policy or enough life insurance. Whole life policies cannot be canceled by the insurance company due to advanced age or illness, but carriers may reject your application if you are too old or unhealthy. Whole life insurance also has additional advantages when used in financial and estates planning since returns on life insurance accounts are tax deferred and life insurance death benefits are not subject to taxes.
In the end, the type of life insurance you buy depends on you and your family’s financial needs. There are dozens of life insurance companies in the United States, each offering different life insurance rates for the same types of policies and death benefits. Consumers must compare whole life insurance quotes online to find the best life insurance available to them.
Enter your zip code to begin a free, instant life insurance quote now and compare whole life insurance rates, policies, and insurance companies so you can buy cheap and affordable life insurance in the future.
