Determining which kind of life insurance policy is right for you is a significant decision that can have long-lasting effects on both your life and your family members’. If you want to invest in an insurance policy that will guarantee a payout no matter what, a whole life policy may be the right one for you.
What Whole Life Insurance Has to Offer
What is a whole life insurance policy?
A whole life insurance policy is one where you pay a fixed premium (generally on an annual basis) for the duration of your life. In return, your beneficiaries receive a fixed payout. This differs from a term life insurance policy in that you will never have to re-purchase life insurance since your policy remains intact for as long as you pay for it.
What are the benefits for me?
Whole life insurance offers many benefits that may not be available with other types of life insurance. For example, each payment you make contributes to a savings fund that comes with the policy. This cash value can be withdrawn in emergencies (although it may affect the value of the payout) or borrow against it to take out a loan. The cash value is also tax-deferred, making it a good investment and a potential asset to use during retirement. Some insurance companies also offer an annual dividend that can be reinvested into your cash value, taken out as cash, used to increase the death benefit to your beneficiaries, or pay premiums on your policy.
What are the benefits for my beneficiaries?
The assets accumulated in a whole life insurance policy offer many advantages to the beneficiaries of the policy. Firstly, the sum they receive will be tax-free and most likely easier to get than physical property or real estate. This can help your loved ones offset the immediate costs of your passing, like funeral expenses. Also, due to the nature of the policy, the recipients of the policy are guaranteed to receive the specified sum, no matter when you die.
It is always wise to consult with your financial advisor before purchasing a life insurance policy to ensure that it is the right one for you. If you are looking for a way to guarantee that your loved ones receive an insurance policy, a whole life insurance policy may be the right one for you.