When it comes to life insurance, there are a bunch of options and even more life insurance questions. Most people first have to determine what type of insurance works best for them. Whole life insurance is one of those options. Please use the following points to help you figure out if whole life insurance is right for you.
Whole Life Insurance – Lifetime Coverage
With whole life insurance, you get lifetime coverage. As the name suggests, whole life insurance lasts you throughout your entire life. You don’t have to worry about renewing your policy every few years and your death benefit will stay the same. You also don’t have to worry about trying to find an insurance company when you are a senior citizen since you will still have the same coverage you always have paid for. Plus, you don’t have to worry about going to medical exams year after year. Whole life insurance provides great security for the family that is looking for certainty in their insurance policies and will need coverage forever.
Whole Life Insurance – Stable Payments
Whole life insurance makes sense for those that are looking for a policy with stable payments since the payments remain the same as long as you don’t let your policy lapse. This gives you a fixed cost that you can budget for year after year, which is different than the higher payments later in life with term life insurance. Overall, those payments will be more expensive that term life payments, but it does make sense if you will want policies after you retire.
Whole Life Insurance – Cash Value
Another advantage of whole life insurance is that it has a cash value. The value of your policy will continue to increase over time and offers you a fund that you can tap into if needed. The cash value rises as you make premium payments. You can always borrow against the cash value of the policy, and you won’t have to pay any taxes on that accumulation unless you choose to redeem it. But the cash value of the policy is one of the things that makes it more expensive than term insurance.
My husband and I save enough now that we will not need life insurance by the time that we retire. By putting away 30%-40% of our income every month, we are well on our way to being self-insured by the time we retire at age 52. This means that stable life-time payments and a cash value aren’t enough to justify the general extra cost of whole life insurance for us. Term life insurance is offering us the basic coverage we need for a much lower price, and we can easily drop it when it becomes more expensive in our golden years. We currently pay less than $100 a year for each of us to be covered up to $100,000, but we will never see any money from our premiums again. You just have to look at the trade off and what is best for you.
Do you have whole life insurance coverage? Why or why not?