Whole Life Insurance
Whole life insurance provides coverage for the entire duration of the insured’s life (pending the premiums are paid), unlike term life insurance, which provides coverage for a pre-determined duration of time. One of the disadvantages of term life insurance is that your beneficiaries will not receive compensation if you outlive your policy. However, since term insurance costs can increase as a client ages, whole life insurance may actually be less expensive in the long run.
What you should know about whole life insurance:
- Whole life insurance can be more expensive in comparison to term insurance; however, keep in mind there is a more certain payout for your beneficiaries rather than if you should outlive a term life insurance policy.
- Whole life insurance policies can be paid up, and there is still a payout. For instance, you do not have to pay for the coverage indefinitely – think of it as owning versus renting. You own your whole life insurance policy when it is paid up.
- The cash value of whole life insurance policies grows tax-deferred and you can borrow from the cash value in the form of a policy loan (using the death benefit as collateral) or withdraw from your basis (the money you’ve put in).
- Whole life insurance provides flexibility with cash value, as the policyholder may choose to use the income growth during a time of need and pay it back at a later date.
- Whole life insurance policies are asset protected. In the event that the insured is involved in a law suit, the individual suing them cannot obtain the cash value of their whole life insurance policy as a financial asset.