Whole
Life Insurance
When people begin
their search for life insurance, they are bewildered at all the different types
of policies that are available to them.
They may be surprised, as well as confused by all of the insurance jargon that
describes all of the different policies.
Since many people have different needs when it comes to life insurance, it is
wise that those in the market for a policy do a bit of research to determine
what kind of life insurance is best for them.
It is important to make sure that the life insurance policy will work for their
particular situation.
With regards to
whole life insurance, there are three different categories that this life
insurance can fall into:
· Traditional
whole life insurance- this type of life insurance will pay a death benefit to
the named beneficiary to cover expenses such as funeral and burial costs,
credit card debt, mortgage payments as well as unpaid medical bills.
· Universal
whole life insurance- this type of life insurance offers am
adjustable premium, and once enough cash value is accumulated, has provisions
that allow the payments to be stopped and resumed at the policy holders
leisure.
· Variable
whole life insurance- this type of life insurance policy offers a net
investment return, but also offers no guarantee of cash value.
In essence, whole
life insurance offers a policy with a level premium and a cash value buildup
that does not ever have to be converted or renewed.
It basically works as a forced savings account.
Once the cash value meets or exceeds the death benefit, you will be able
to borrow a portion of this money for whatever need may arise.
There are numerous advantages to whole life insurance which
include:
· Premiums
stay level and are payable for life.
· Dividends
are a possibility, but are not always guaranteed.
· Cash
values are guaranteed.
Whole life
insurance is good for the individual with long-term goals.
Consider that this type of life insurance has what is called a
“termination date.” This
termination date would normally be the policyholders 100th birthday.
So, if the policyholder lives to be 100 years of age, they would receive
the cash value of the policy once they turn 100.
On the other hand, if the policyholder dies before they reach this
age, the face amount of the policy would be paid to the beneficiary.
The best way to
learn if whole life insurance is worth the risk of tying up funds is to consult
a financial advisor, as well as a reputable insurance agent.
Both of these individuals know the specifics regarding life insurance
and savings plan, and will be able to determine what needs can
be met with a particular kind of life insurance.