For a long time in America, whole life insurance was what most people bought. Lately, insurance companies have been offering other insurance at lower rates, but in most cases, whole life insurance is still the most beneficial of all plans.
While term life insurance is for a specified period, whole life insurance is designed for life time coverage. This makes it ideal for someone with a steady income who wants to plan for the future.
Whole Life Insurance Premiums and Death Benefits
Whole life insurance rates have the steady quality that drives long-term policy holders to this option. While term life insurance premiums generally go up each time the holder renews the policy, whole life insurance rates usually stay the same until time of death or cancellation of the policy. Some policies do have increasing rates, but the increases are defined in the contract when the policy is purchased. So there?s no reevaluation and no surprises.
The benefits paid at the time of death stay the same with whole life insurance, so the holders can rest assured that their families are taken care of.
Cash Value Turns Whole Life Insurance Into an Investment
A term policy begins and ends (with the policy holder loosing all the money he or she paid into it). A whole life insurance policy builds cash value. How? A portion of the premium is put towards investment in the company, so the policy holder also becomes a share holder. Over time, this builds into an amount of money that can be used. That amount is called the ?cash value?.
The policy holder can cancel the whole life insurance policy and take the cash or re-invest it in a new policy to better suit his or her needs. Or the holder can take the cash value, and stop payments, but still retain a portion of the death benefits (this is called “Paid Up Insurance”).
As the cash value of a whole life insurance policy grows, policy holders can borrow money using the cash value as collateral. This allows whole life insurance policy holders to keep the insurance policy, but still use the money. If the debt is unpaid when the policy holder passes away, the benefits paid might be smaller.
Flexible Payment Methods for Whole Life Insurance
Single Premium: This whole life insurance quote is usually the most beneficial. It involves one single payment, and produces an instant cash value. The death benefits are defined and never change. It’s ideal for anyone who has a portion of money they want to put away for their family.
Limited Payments: This is when the premiums are only paid for a specified number of years. The amount for the premiums is specified in the whole life insurance quote and never changes. The cash value of the whole life insurance policy rises steadily.
Modified Premiums: The premium amounts increase over time, and then level after a specified number of years. All of the specifics are clearly defined in the whole life insurance quotes. The benefits amount stays the same, so it allows someone to purchase a larger policy than they can afford at that time.
Continuous Premiums: Continuous premiums never change and are due for the life of the policy holder. The cash value rises steadily. This is the most popular whole life insurance policy.
Other Whole Life Insurance Options
Whole life insurance companies often offer other options like term riders, where holders can add temporary policies for short terms. Whole life insurance policies also sometimes offer child and spousal riders, so holders can add someone to the same policy.
Choosing the right insurance policy isn’t always the simplest decision. Ask for the advice of an insurance agent who has the benefit of experience and can help you find decide if whole life insurance is right for you.