Life insurance can be a difficult topic, and most people aren’t sure what their options are for life insurance plans. While many options are available, many people opt for whole life insurance. This may leave you to wonder, what exactly is whole life insurance? What are the benefits of this plan? Below we will dive into everything you need to know about whole life insurance so that you can make the best decision for yourself and your family.
What is whole life insurance?
Simply put, whole life insurance is a life insurance policy that is a permanent policy for the insured’s life as long as the premiums are paid. The way it works is that once you enter into an agreement, the insurance company agrees to pay your beneficiary a certain amount of money when you pass away. This money is often referred to as a death benefit. You get to choose the amount you wish to have for this policy, and the premium is based on your age, gender, and health. As long as the premiums are paid, the policy will stay in effect, and the premium will remain the same regardless of any health or age changes. Over time, the premiums that you pay will develop a cash value. This cash value can be borrowed as a loan with stipulations. The loan must be paid back before passing, or it is deducted from the final policy value.
Are there different types of whole life insurance?
When you choose this life insurance, there are different options to choose from. Typical, limited payment, survivorship, and final expense insurance are some of the most common types. Typical policies include level premiums, so your rate stays the same throughout the policy’s life. This policy is in effect until you pass as long as the premiums are paid.
Next is the limited payment policy. Limited payment policies are when you make payments for a set number of years from 10, 15, or 20. This is good for many people because you don’t have to make payments for the rest of your life. With this policy, you are paying upfront so you can enjoy time without paying premiums. The following policy is called survivorship and is popular among many married couples. This policy covers both spouses and isn’t paid until both of them pass away. This is a great option, especially if there is a special needs child that will need further assistance after death. Another way this policy can be used is for adult children to pay estate taxes upon their parents’ passing. Last is a final expense insurance policy. This is one of the most popular types of whole life insurance policies. This policy is usually set to a lower limit, like $20,000, for final medical bills and funeral expenses.
What are some of the common misconceptions of whole life insurance?
When looking into getting a policy, you may have heard a few things from coworkers and other relatives about these policies. Often these are common misconceptions with life insurance policies. One of the first misconceptions is that you have to be in perfect health. There are a lot of policies available that don’t require a medical exam and are considered guaranteed acceptance plans. The next misconception is that life insurance is too costly for seniors. While some of the premiums can cost a lot depending on the payout, some plans are more affordable, like the final expense insurance.
Find the right policy for you.
While many people often compare term life insurance to this life insurance, it is all based on your needs. If you are trying to prepare for loved ones, whole life insurance offers many different options for different budgets. This life insurance can make a difficult time easier and give you the peace of mind that you deserve.