How Would A Whole Life Policy Benefit Me?
When shopping for life insurance, you’ll likely wonder whether you should buy term life insurance or whole life insurance. While term life insurance is more common, a whole life policy might be the right fit for you.
Whole life insurance is a lifetime commitment. Once coverage has been paid for and issued, it can no longer be taken back, canceled, or even have its terms reduced. This finality is unique when compared with term life insurance and requires a degree of certainty before purchasing a policy. Be sure to consider your options and look at your custom whole life policy benefits.
To help you get started, here’s an overview of what a whole life policy can get you and what you need to know.
Whole life insurance
Whole life insurance is permanent. As long as you pay the premiums, your policy stands. A unique part of whole life insurance is that it comes with an extra savings component known as the ‘cash value.’ This cash value is essentially a savings account funded by the premiums you pay while living. Your payments slowly shrink the death benefit, which in return increase the cash value component. At one point in time, you may be left entirely with the cash value. As that savings account earns interest and dividends, you will see a minimum yearly return.
Pros and cons of whole life insurance
When deciding whether whole life insurance benefits are right for you, take into account the following factors:
- The death benefit is fixed and won’t expire. So, if you buy a $1,000,000 policy when you’re in your twenties and your passing comes much later in life, your family or other beneficiaries will still receive the full death benefit.
- Because you sign and buy your life insurance policy once, you agree to pay a single premium, and the monthly payments remain consistent. This provides security and value compared with term policies that may increase.
- The cash value can be looked at as an involuntary savings account.
- While the benefits are higher with whole life, the policies do cost more than term policies, sometimes even upwards of 10 times the amount.
- If you fail to keep up with your payments, you will have to surrender your benefits. Unfortunately, this can happen when people overestimate their ability to pay, with over one-quarter of policies abandoned within the first three years.
- Due to the high cost, it can happen that people are buying less coverage than they need.
Is whole life insurance right for you?
While the benefits of whole life insurance policies are clear, you’ll have to pay a premium to unlock those rewards. Determining what’s right for you will depend on your unique circumstances. Schechner Lifson Corporation, an independent insurance agency, can offer you help to determine which type of policy is best for you. With experienced and caring agents, Schechner Lifson Corporation can make sure you get the right coverage at a price that may just be more affordable than you think. Contact us today!