Whole Life Insurance Policies
Whole Life Insurance – Did You Know?
Did you know that whole life insurance or some variation thereof is bought more than another types in the United States? Why do you think this is so? Is it because the people know nothing about term insurance? Not so! Term insurance is simple to understand. You own $1,000,000 of term life insurance for a specific period of time and you die within that period the life insurance company pays $1,000,000, as long as you keep paying the premiums. Everyone knows about term life insurance.
Permanent life insurance is a different matter. There is much more to absorb when it comes to a permanent policy. You can consider the whole life insurance policy which is really a policy which lasts for the rest of your life, even if you live to age 100. The premium payments can be level for the entire period or, as with some modified whole life policies, you start out with a lower premium and it increases every year for 5 or 10 years then it levels off.
On the other hand you can contract with the life insurance company to pay only for a specific period of years, 10 years or 20 years for example, and the policy will remain in force for the rest of your life. You can also arrange with the company to pay one lump sum and you have your single premium whole life insurance policy for the rest of your life.
Even the the variable life insurance policy is whole life based thus it is considered permanent life insurance. Variable life insurance is a whole life policy with an investment portfolio attached.
These are the basic variations of whole life insurance. Each life insurance company has a different slant to their modified whole life policies, however.
Whole life insurance policies have guaranteed cash values which you may use as you see fit. You may use these values as collateral if you want to get a loan from a bank or other financial organization. On the other hand you may choose to borrow the money from the policy itself. The interest rate is usually lower and you are never under pressure to repay within a given period of time. Any outstanding balance, however, will be deducted from the face amount upon your death.
Whole life insurance policies also earn dividends if your life insurance company is effective with their investments and also if they keep expenses down. Dividends are not guaranteed. These dividends are applied according to your wishes.
The dividends earned on your whole life policy can be used to reduce premiums, can be paid to you in cash each year, can be left with the life insurance company to accumulate interest or they can be used to purchase paid up additions. Paid up additions are tiny single premium whole life insurance policies which increase the amount paid at death. They also have cash values which accumulate interest and they earn dividends as well.
Permanent life insurance policies are very effective, yet complex, tools. If you take the time to understand them you will more appreciate why more people buy them than term insurance. Whole life insurance can be kept for the rest of your life.
Advantages of Whole Term Life Insurance
As is obvious from the name, whole life insurance is a permanent life insurance covering the whole life of the policy holder with timely premium payments, as long as the policy holder is alive. Whole life insurance is apt for those who plan on long term goals.
Though term life insurance has gained popularity due to various reasons, whole life insurance cannot be set aside entirely as it has a lot of advantages to its credit. Primarily whole life insurance guarantees the death benefits that never decrease and nonfederal income taxes are charged upon death and lasts an entire lifetime which is a good advantage.
Premiums are generally a little higher than a term life insurance and as the age progresses, the annual premium tends to lessen. As against term life insurance which has no cash value, whole life insurance has some money stored as cash value. If the policy is terminated, accumulated guaranteed cash would be paid. It is also feasible to take loans against the whole life insurance policy. The guaranteed cash values can be used for emergencies and temporary needs. The cash value increases as the premiums are paid.
When a policy holder has a participation in whole life insurance, he or she is eligible for earning dividends which would be paid in cash. This cash can be either used to keep within the policy to generate interest or used to minimize the premiums. All the cash that are accumulated or borrowed are on a tax free basis except when it is withdrawn.
Whole life insurance policies can never be struck off by the insurance company. As the whole life insurance policy gets older, the surrender value becomes more or less the amount that has been paid and thus, the cash value along with the dividend far exceeds the premium that have been paid.
The dividend from a whole life insurance can also be used to purchase paid up additions that are small, fully paid up whole life policies. Whole life insurance quotes are available online which give the convenience of getting the policies instantly and urgently. The encouraging factor is that almost all reputed companies are offering whole life insurance quotes online and it becomes easier to compare the various offers and choose the best suited.
Whole life insurance is not only a tool to protect the dependents after the demise of the policy holder; it is also a way of saving for the future and has an emotional attachment to it. Hence, sufficient thought and time have to be spared to get the best quote and option available and decide accordingly, to ensure a secure future and a comfortable present life.
Different Types of Life Insurance: Which One is Right For You?
Life insurance is a great way to protect your family financially should anything ever happen to you. You may want to consider getting a life insurance policy if you are married, have children, or other people depend on your income for support.
There are a number of different types of life insurance policies available, and finding which one is the best for you and your family can be a challenge. Here are some of the different types of life insurance policies out there.
Term Life Insurance
Term life insurance is perhaps the simplest and cheapest type of life insurance available. This type of life insurance is considered temporary and provides protection for a certain period of time, usually 1-30 years. If the insured dies before the end of the term, his beneficiary receives the face value of the policy. If he does not die by the end of the term, he does not receive anything. At the end of the term life insurance period, you can choose to extend your policy or convert it in to a permanent life insurance policy. If you choose to renew, your life insurance premium will most likely go up. Most people argue that term life insurance gives you the most value for your money. You can compare free term life insurance quotes at ELifeInsuranceSaver.com
Whole Life Insurance
Whole life insurance, also called permanent life insurance, is basically term life insurance with an investment component that allows your policy to build cash value that you can borrow against. The investment could be in stocks, bonds, money markets, etc. Whole life insurance is very expensive because of the investment commissions and fees you are charged, and there is no guarantee that your investment will even make any money. As with term life insurance, your premium will be the same over the life of the policy. Three common types of whole life insurance policies are universal life, variable life, and traditional.
Universal Life Insurance
Universal life insurance is a form of permanent life insurance policy that combines a term life insurance policy with a tax deferred interest accumulating savings account. People that feel they need life insurance into their 70s and 80s would benefit from this policy because it allows adequate time for substantial savings growth. It takes a while for this type of policy to build considerable value, and you might not be able to save much in a shorter amount of time. If you feel that you do not need life insurance for that long, you should consider getting a term life insurance policy and finding another way to save for retirement and the future.
There are lots of different life insurance options out there. This is a very important decision for you and your family, so take your time. You can compare free life insurance quotes from various companies for different types of policies to see which one is best for you. The more research you do, the more knowledgeable you will be, and the better chance you will have at finding the perfect life insurance policy.