Whole life insurance is one of the most popular, yet least understood financial vehicles. There are definitely times when it makes sense, but you need to know what you’re getting into.
There are a variety of different life insurance policies available for people who want to provide financial security for their family.
Whole Life Insurance is one of your options, but is it a good fit for you?
Let’s take a look at this type of policy and explain how it works, its pros and cons, sample whole life insurance quotes, and who should buy it so you can make an informed decision.
Table of Contents:
What Is Whole Life Insurance?
Whole life insurance is a type of cash value life insurance designed to provide death benefit protection for your entire life.
Many individuals and businesses also use it for their tax-favored cash accumulation and access to cash value for you or your loved ones.
Key Features of Whole Life Insurance:
- Guaranteed Level Payments
- Guaranteed Tax-free Death Benefit
- Cash Value Growth with Guaranteed Minimum Interest Rates
- Tax-free Access to Cash Value via Policy Loan
Cash Value Definition: Whole life policies come with a sort of savings account, known as cash value, which earns a guaranteed minimum interest rate.As it grows, it can be used to pay policy premiums or the funds may be borrowed tax-free.
If you really want to dive deep, a whole life insurance definition is not where to start. It’s all about the benefits.
Whole Life Insurance Benefits
Whether you’re interested in life insurance protection for your family or your business, whole life offers a few key benefits that help in either situation.
Some of these benefits are a guaranteed death benefit for life, the ability to build cash value, and the opportunity to earn dividends.
#1 Coverage for Your Entire Life
Unlike term, whole life offers guaranteed protection for your loved ones that lasts a lifetime.
Payments (premiums) are guaranteed to stay level as long as you pay on time, and your death benefit is guaranteed for life as well. Your death benefit may even grow if you buy “paid-up additions.” (See further down)
To lock in the best whole life insurance rates for your entire life, we recommend Health IQ.
#2 Tax-Free Death Benefit
While few things in life are truly tax-free anymore, life insurance proceeds to your heirs are one of them.