- Whole Life Insurance -
Understanding that a Whole Life Insurance policy is very different than a Term Life policy is the first step into understanding how each one is better in different scenarios. The basic difference between term and whole life insurance is this: A Term Life Insurance policy is life coverage only.
With a whole life insurance policy, as long as one maintains their premium payments, the policy will not expire for a lifetime. As the term applies, whole life insurance supplies coverage for the whole life or until the person reaches the age of 100. Whole life insurance policies build up a cash value (usually beginning after the first year). With whole life, you pay a fixed premium for life instead of the fluctuating premiums found on renewable Term Life Insurance policies. In addition, whole life insurance has a cash value feature that is guaranteed. In term and whole-life, the entire premium must be paid to maintain the insurance.
With level premiums and the accumulation of cash values, whole life insurance is a good choice for long-range goals. Besides permanent lifetime insurance protection, Whole Life Insurance features an element that allows you to build cash value on a tax-deferred basis. The policyholder can cancel or surrender the whole life insurance policy at any time and receive the cash value. Some whole life insurance policies may achieve cash values larger than the guaranteed amount, depending on interest crediting rates and how the market performs. The cash values of whole life insurance policies may be affected by a life insurance company’s future performance. Unlike whole life insurance policies, which have guaranteed cash values, the cash values of variable life insurance policies are not guaranteed. Supporters of whole life insurance say the cash value of a life insurance policy should compete well with other fixed income investments.
Unlike Term Life policies, whole life insurance provides a minimum guaranteed benefit at a premium that always stays the same. One of the more paramount benefits of a participating whole life insurance policy is the opportunity to earn dividends. The insurance company based on the overall return on its investments sets earnings on a whole life insurance policy. In addition, while the interest paid on Universal Life Insurance is often adjusted monthly, interest on a whole life policy is adjusted annually. Like many insurance products, whole life insurance has many available policy options.
Making sure you can budget for whole life insurance for the long term is important. You do not want to buy whole life insurance unless you are absolutely sure you can afford it. You should buy all the coverage you need while you are younger, but if you cannot afford whole life insurance, at least make sure you invest in Term Life Insurance. Whole life insurance policies do have the highest premiums, but one must remember that it’s insurance for your whole life, no matter when you pass on. The level premium and fixed death benefit make whole life insurance very attractive to many people. Unlike some other types of permanent insurance, with whole life insurance, you may not decrease your premium payments.
- Call Hicks Insurance -
(281)812-1876
Hicks Insurance – Humble, Texas – Life – Term Life – Whole Life – Universal Life