Whole Life Insurance

The general concept of life insurance is simple. You and an insurance company enter a contract where the insurer, in exchange for a premium, guarantees a specified payment to your beneficiaries in the event you pass away while the life insurance contract is in place.

Whole life insurance policies are contracts providing a fixed amount of benefit for your entire life. As long as the premiums are paid, your beneficiaries will receive the death benefit whether you live another 10 years or well past the age of 100. This differs from a term life insurance policy which only provides coverage for a limited time, such as 10 or 20 years.

Like term life insurance, whole life insurance premiums are fixed and are used to pay for insurance and administrative costs. But a whole life insurance premium has a third element – tax deferred savings. This third component is used to build up cash value within the policy.

Whole life insurance policies come with several advantages. Here are five key benefits:

1. Lifelong Coverage: As long as you continue to pay premiums, whole life insurance provides coverage for your entire life, unlike term life insurance which covers you for a specific period.

2. Cash Value Component: Whole life insurance policies build cash value over time, which you can borrow against or even withdraw. This cash value can serve as a source of emergency funds or supplemental retirement income.

3. Fixed Premiums: The premium payments for whole life insurance are typically fixed and do not increase as you age, making it easier to budget for long-term.

4. Death Benefit: The death benefit is paid out to your beneficiaries tax-free, providing them with financial security and peace of mind after you pass away.

5. Living Benefits: Most Whole Life policies offer Living Benefits. These benefits allow you to a portion of your death benefits to help pay the cost of Criticla and Chronic illnesses..

To learn more about whether a whole life insurance policy might be right for your financial needs, contact my office today.