Whole life insurance, also known as "ordinary life" insurance, and sometimes just "life" insurance, are a permanent life insurance coverage that is sure to stay in force for an entire insured's life, required payments are made, or at least to the end of the insured's age. In most cases, a policy can last as long as one's lifetime. The insured may also borrow against his or her policy during one's life by making monthly or annual payments toward the premium. The benefits from the policy are fully tax-qualified, so there are no limits on how much cash one can borrow against his or her policy.
Pros of Whole Life Insurance There are many pros to whole-life insurance policies.
1. One of the most obvious pros is that the premiums are affordable. Since the premium it is not a huge sum of money, it generally has a low cost per month. In contrast, variable life policies, such as those found in many 401(k) plans, have costs that increase over time because of fluctuating investments or other factors. In general, whole life insurance policies are more flexible than variable insurance plans. This is especially true for the younger, less experienced individual.
2. Another pro to whole life insurance is that the coverage is almost limitless. Because a premium payment is required every month, and because the insured will likely outlive his or her beneficiary, this type of coverage allows a person to plan for his or her entire life. In addition, unlike some other forms of coverage that change with the aging of the insured, whole life insurance policies do not become obsolete as a person ages. Instead, they remain effective for the rest of an insured's life.
3. Yet another pros of a whole life insurance policy is that the policy it grows with the insured. Unlike variable insurance plans where a monthly payment varies with the interest rate, the value of a whole life insurance policy increases over time. The policy pays out at the end of the insured's age. For many people, this is an attractive feature because it allows them to take care of their families as they get older. It also allows them to use the policy to help defray any cost that may arise in the future, while also providing adequate protection should something happen to them.
4. Finally, another proof whole life insurance is that the premiums paid by the insurer do not grow with time. Unlike term life insurance (which, for most people, comes with an annual increase in premiums), whole life insurance remains consistent throughout the life of the account. As long as you make premium payments, you will receive the same benefit, regardless of how long you live. This can provide long-term stability for some people who are looking for a way to protect their loved ones in the event of them passing away from a terminal illness.
There are some downsides to whole life insurance.
Although the premiums are often low, it can be harder and more expensive to borrow against the cash value of the policy, especially if you have a bad credit history. If you become ill during or after your whole life insurance policy has been in place, you may also be denied renewal because the company no longer sees you as a good risk. Whole life insurance can also be difficult to sell if you are not a smoker or if you want to pay a higher premium due to your health.
Pros of Whole Life Insurance There are many pros to whole-life insurance policies.
1. One of the most obvious pros is that the premiums are affordable. Since the premium it is not a huge sum of money, it generally has a low cost per month. In contrast, variable life policies, such as those found in many 401(k) plans, have costs that increase over time because of fluctuating investments or other factors. In general, whole life insurance policies are more flexible than variable insurance plans. This is especially true for the younger, less experienced individual.
2. Another pro to whole life insurance is that the coverage is almost limitless. Because a premium payment is required every month, and because the insured will likely outlive his or her beneficiary, this type of coverage allows a person to plan for his or her entire life. In addition, unlike some other forms of coverage that change with the aging of the insured, whole life insurance policies do not become obsolete as a person ages. Instead, they remain effective for the rest of an insured's life.
3. Yet another pros of a whole life insurance policy is that the policy it grows with the insured. Unlike variable insurance plans where a monthly payment varies with the interest rate, the value of a whole life insurance policy increases over time. The policy pays out at the end of the insured's age. For many people, this is an attractive feature because it allows them to take care of their families as they get older. It also allows them to use the policy to help defray any cost that may arise in the future, while also providing adequate protection should something happen to them.
4. Finally, another proof whole life insurance is that the premiums paid by the insurer do not grow with time. Unlike term life insurance (which, for most people, comes with an annual increase in premiums), whole life insurance remains consistent throughout the life of the account. As long as you make premium payments, you will receive the same benefit, regardless of how long you live. This can provide long-term stability for some people who are looking for a way to protect their loved ones in the event of them passing away from a terminal illness.
There are some downsides to whole life insurance.
Although the premiums are often low, it can be harder and more expensive to borrow against the cash value of the policy, especially if you have a bad credit history. If you become ill during or after your whole life insurance policy has been in place, you may also be denied renewal because the company no longer sees you as a good risk. Whole life insurance can also be difficult to sell if you are not a smoker or if you want to pay a higher premium due to your health.
