Why do people still shop for whole life insurance? These days, we seem to hear a lot more about term life. We know that premiums are lower, and that term policies are more like buying pure insurance. But many people still want whole life, despite higher premiums, so there must be some advantages to permanent life insurance.
The simple fact that whole life is permanent should make the first advantage obvious. The policy will cover our lives as long as it is paid for or paid up. That means we will not lose coverage when a policy expires no matter how much money we have spent in the past.
The rates will also stay level, and so will the policy death benefit. This means that we do not have to worry about rate increases or benefit reductions. This is not always true of term policies. Rates may not be guaranteed for the whole term, and the death benefit may decrease.
Most of the time, death benefits are tax free. You can also enjoy the security of knowing that you will leave money to your beneficiaries without also leaving an additional tax burden. This is why many people choose to use life insurance as a way to transfer estates.
Of course, the final advantage of permanent policies over temporary policies is the fact that they actually help us grow our assets. This can be a great reason to consider whole life over temporary policies. While we pay for coverage, we also grow a cash account.
If you have built up a policy cash account, this money can actually be used while you are alive. You can get the money back if you surrender your policy. You can also borrow against this value while still keeping your policy in force. Some policies will let you use your cash value to make payments for awhile.
Another use for permanent life insurance has become popular lately. This is called a life settlement, and it means that investors purchase the policies for cash. The cash settlement will usually be less than the death benefit, but much more than the cash surrender value. This allows older people to sell unwanted life insurance for money they can use to help them enjoy their lives.
So even though you may hear a lot more about term life, you should understand the advantages and disadvantages of the different types before you make a decision.
Are you shopping for life insurance?? Visit us : Whole Life Isurance Explained. You should take the time to read about types of life insurance before you buy.
Tags: families, finance, life insurance, senior life insurance, seniors, term life insurance, whole life insurance