Whole life insurance, also called « continued life » insurance, is a policy that is typically guaranteed to keep in effect for the insured’s lifetime, provided at least required premiums have been paid. However, if the insured does not make payments, the insurance contract is automatically terminated and the death benefit of the policy becomes worthless. This type of insurance is typically obtained by those who wish to protect their financial assets in the event of disability or death.
There are many advantages to whole life policies. It allows the insured the ability to borrow more than the amount required under the term of the policy. Some plans may allow the insured to borrow up to the total value of the policy. In addition, the insured may borrow against the policy, if a borrower defaults on a loan.
An individual who has obtained whole life coverage can borrow against the policy in cases where an immediate need is shown, including an unexpected trip, medical emergency, personal debt, or personal injury. Because of these benefits, the policy often serves as protection against the loss of the insured. A person who purchases a whole life policy, however, should understand how it functions and the limitations.
Whole life policies are usually purchased with a guaranteed premium payment. The insurance provider will pay all required premiums until the insured reaches the predetermined term of the policy. At the end of the policy period, the insurance company will issue a refund check to the insured that reflects the premium paid.
Most insurance companies require that individuals obtain at least three years of coverage prior to making a premium payment. Whole life policies are also available from certain health insurance providers, but premiums may be higher because they provide protection only for a specified number of years.
The primary drawback to whole life policies is that they may be too expensive for many consumers. Individuals who purchase policies in this manner may be required to pay out more money on the policy than they would if they purchased individual policies. Whole life policies are usually available at variable premium rates, but premiums may fluctuate between providers. Therefore, when searching for coverage, it is important to compare costs and benefits of various providers. One way to do so is by searching for providers on the Internet.
Life policies that offer flexibility in premium payments are often less expensive than traditional policies, but have the same important features, such as cash value. The policyholder may receive tax-deferred compensation if they die before paying off the policy. One of the advantages of whole life policies is that the insurance company can pay out benefits to a beneficiary of the policyholder after death. The insured may also choose to take a loan against the policy to provide money for unexpected expenses, such as car repairs.
In general, whole life policies are good options for people who want coverage that provides peace of mind, provides the assurance of long-term financial security, and gives peace of mind in the event of a death or disability. These policies also provide flexibility to borrow against a policy’s value. Many people use whole life policies to provide funds for college education, for their children’s education, or for other reasons.
Many insurance providers may be able to provide whole life policies at an affordable rate. A broker can help an individual or couple find the best rates by comparing several companies and finding the policy that best suits their needs. Some brokers provide the service for free or for a fee, while others charge a small fee to connect a client with various insurers. Some insurance providers may require a high deductible to protect against claims, but the policyholder has a greater amount of coverage and can reduce their premium payments when they reach a lower deductible.
For most people who purchase whole life policies, the premium will be one of the largest expenses for the policy, so it is important to shop around for the best premium. rates. There are some insurers who offer competitive rates and discounts on their whole life plans, so consumers may be able to save money when purchasing a whole life policy.
Although whole life policies offer security and financial protection, they can also come with other advantages. Some of these advantages include tax-deferred compensation and the ability to borrow against the policy. Other advantages of whole life policies include no restrictions on the amount of cash value that can be borrowed and no annual limits on the total premium cost.