Whole life insurance is one of the most popular permanent life insurance policies that people buy these days. Here’s everything you need to know about it to make an informed decision:
What Is Whole Life Insurance?
Whole life insurance is a type of permanent life insurance, which means it provides coverage for one’s entire lifetime. As opposed to term life insurance, which covers a specific period of time, you can’t outlive a whole life insurance policy.
That means that your beneficiary or beneficiaries will receive the payout amount upon your death, as long as you’ve provided all the premiums on time.
Apart from a death benefit, every whole life insurance policy comes with cash value, which means you can build equity over the years.
How Does Whole Life Insurance Work?
When buying a whole life insurance policy, you need to determine how much coverage you need. Depending on your age and health, you need to decide on the amount of your monthly or annual premiums to get the right policy for your needs.
The most common deciding factors may include your income, any potential outstanding debts, and the plans you may have for your family’s (or any other beneficiary’s) financial future.
Whether they use it to pay off a mortgage loan or other debts, cover the funeral costs, or anything else, the insurance is a great way to provide them with tax-free money after you’re no longer with them.
The Benefits of Whole Life Insurance
Whole life insurance comes with three important benefits:
A Guaranteed Death Benefit
If you regularly provide all the necessary premiums specified in the insurance policy, your beneficiary or beneficiaries will get a death benefit after you pass away.
They’ll be able to cover your funeral expenses, pay off any outstanding debts, or pay for your children’s or grandchildren’s higher education, for instance.
Accumulating Cash Value
A great part about whole life insurance is that it features a savings component. That means that all your premiums come with cash value that you can build up over time.
Depending on your chosen insurance company, you may be able to withdraw the accumulated funds after a while or borrow some money against the policy. It’s kind of like an emergency fund, but it only includes a portion of every premium.
Keep in mind that your cash value will decrease if you borrow or withdraw from the savings component. However, withdrawing the funds won’t reduce the death benefit. Taking out a loan against the policy and not paying it back will.
Another great thing about whole life insurance plans is that you always provide fixed premiums. You don’t have to worry about them increasing as you age or as various conditions on the market change.
Just like the death benefit stays fixed (unless you’re late with the payments or fail to pay back an outstanding debt against the policy), so do all the premiums.
If you would like to have more flexibility to make adjustments to the premiums or the death benefit, you should consider universal life insurance. Here at Melton McFadden Agency, we offer those policies, too, so feel free to reach out if you’re interested in learning more about them.
Should You Buy a Whole Life Insurance Policy?
If you would like to secure a better financial future for your family or any other loved one after you’re no longer with them, getting whole life insurance might be the way to go. Even if the bequeathed funds are enough to cover the funeral and other minor expenses, it might be of huge help to your beneficiaries.
Here at Melton McFadden Agency, you can get the best whole life insurance in Michigan.
Being one of the leading whole life insurance companies in the industry, we offer some of the most favorable whole life insurance plans in the city. We can help you choose the right policy for your unique needs, so don’t hesitate to get in touch.
Contact us today to get a quote, or ask us anything about this or other types of insurance policies we offer.