Future value is crucial in considering whole life

Sep 29, 2011

Whole life insurance is all about ensuring value as time goes on.

Whole life insurance may provide a substantial amount of coverage, but the policy is still a significant financial investment. Fox Business says those who are willing to commit to this account should always assess the long-term monetary benefits before following through with a purchase.

Insurance companies can and usually do provide clients with helpful calculations, consisting in an internal rate of return, or IRR, based on a rate of yearly growth. However, since one's IRR changes as the policy matures, these figures alone don't suffice to determine value years from now.

Fortunately, firms can detail the implications of these numbers, but individuals may need to know what to ask.

"You need to see the average annual and year-by-year rate of return for at least the first 20 years," New York insurance consultant Glenn Daily told Fox Business. Looking ahead is the best way to get a feel for where a plan is headed. Based on how much one has paid, his or her current death benefit and value upon a potential cancellation, companies can evaluate how a policy will perform down the road.

No matter what, people are encouraged to seek help in predicting value. Insurance agencies are always available, and third-party analysts can provide advice that's especially unique to the policyholder.

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