Whole life insurance is the most prominent of the insurance products on the market and the oldest. Whole life literally means whole life. Term life is simply a life insurance policy that will last for a specific amount of time, i.e. 5 years, 10 years etc. After that date, the policy will expire. Universal life is what is called a participating policy with many extra provisions included such as: earning interest on the cash value accumulated, ability to change premium payment schedules ,and many other features for the owner.
Term Life Insurance
For the many who are just beginning their working years, buying a home, or starting a family, term insurance would be a great choice. This product is much more affordable for higher amounts of coverage. This would mean that you can purchase enough to cover the payoff of a current mortgage and preferably enough for the surviving spouse to live on until they are able to join the working force once again. Decreasing term would be another great idea. This could follow your mortgage year by year until the home is paid off. If that inevitable event happens before that time, the policy would have enough coverage in it to cover the existing payoff of the family home. The down side to term life insurance is that it does not build any cash value as you pay your premiums. This means no built in savings account.
Whole Life Insurance
Whole life is a product that has been around for more than 100 years. Whole life covers the policy holder for their whole life as long as premiums are made. The only true advantage to this plan is that you are covered for life and the cash value savings account built inside. The cash value is a portion of the premium payments made into the policy. This account can be cashed in or borrowed against. Of course borrowing against will lower the face amount by the borrowed amount, plus any and all interest until payed back. Never borrow unless it is an emergency. Whole life insurance should be purchased to pay for all final expenses and burial costs. Funerals are not getting any cheaper, the average cost across America is nearly 7000 dollars. Of course the older an individual is, the more they will pay per 1000 of coverage. When individuals reach retirement, this should be looked into, and this should be the only life insurance you carry.
Universal Life Insurance
Eventually, younger consumers became wise to how much they were paying over their life for whole life protection. Companies turned to Universal life as the answer. Universal life has many unique qualities that the policyowner can take advantage of. Some earn a decent interest rate in the cash value account. Some are allowed to set their own payment schedule and even skip payments from time to time without penalty. Universal life would be an alternative for the younger generation just starting out. For the price of premium, universal life has the bang for the buck. In this day and age, saving money is important! So is saving the family homestead.
Life insurance is not just something our grandparents used to purchase. Life insurance is protection for our families. It is true that we do not know when that day will come for us, but we do know that day will come. It will always be a shock, it will always bring sadness, but with the right coverage, it will not be the end to your families way of life. Get a free life insurance quote today to compare multiple policies from highly rated carriers.
Cash value life insurance is different than most policies so it is important to understand how it works and why it may be beneficial for you. First you should know that there are two main types of life insurance- term life and whole life. Term life insurance is temporary insurance that will last for a certain amount of time, or term. Whole life is permanent insurance that builds cash value.
How does whole life insurance build cash value?
Whole life insurance will last for your entire lifetime, as long as you continue to pay your premiums. The fixed premiums are higher than a term life policy and that’s because a portion of your premiums are invested by the carrier. You can look at it as a built in savings element or, as some people refer to it, “forced savings.”As you pay your premiums, your policy will build cash value. This cash value is tax deferred until you decide to withdraw or borrow against it. If you die, your beneficiaries receive the death benefit, which is the face amount of the policy.
What if I borrow from cash value life insurance?
If you withdraw your cash value without surrendering the policy, then you are essentially borrowing against your life insurance policy. The carrier will charge you a specified interest rate until the money is returned to the policy. Any money that is owed at the time of the insured’s death is subtracted from the death benefit.
Cash value life insurance pros and cons
Cash value life insurance has advantages and disadvantages. One advantage is that the premiums are level for life. A whole life policy also has the ability to build cash value, tax-deferred. A disadvantage is that it costs much more than term life insurance. You should weigh the pros and cons of whole life insurance for your particular situation. Be sure to speak with an experienced agent to determine which type of life insurance is best for you. Get some free quotes for term life and cash value life insurance to compare the difference in cost.
If you are currently shopping for life insurance then you have inevitably come to the part where you need to decide whether term life insurance of whole life insurance (permanent coverage) is right for you. You first need to decide how much life insurance you need, what your budget is, and whether you want coverage for the rest of your life, or for a specific term. Here are some of the difference between term life and permanent life insurance.
Price: Permanent life insurance costs more. In most cases, it’s a lot more. See below for reasons why it’s more expensive.
Coverage: Permanent life insurance is coverage that will last for your entire lifetime. Your premiums will never increase and your policy will never be canceled, as long as you continue to make your payments. Term life is insurance that lasts for a certain time period, or term, and then the policy will end or it can be renewed at the current (higher) rates.
Cash Value: Permanent life insurance costs more because a portion of your premium is set aside and invested. Over time, cash value builds up and grows on a tax-deferred basis. Term life insurance premiums pay for a death benefit only so there is no cash value.
I can comfortably say that term life insurance is adequate coverage 95% of the time. It is affordable and you can get more insurance coverage for your money. However, if you want permanent insurance coverage and you like the idea of “forced savings” then whole life insurance might be right for you. Make sure you know all of the ins and outs of your permanent life insurance policy because these policies can be complex and expensive. Get a free quote today and compare the difference in cost for whole life insurance and term life.
Whole life insurance is permanent life insurance that builds cash value. The premium payments are level for life so you don’t have to worry about a rate increase as you get older. Your policy will last your entire lifetime as long as you continue to make your premium payments. When shopping for whole life insurance, it may seem a little daunting because there are dozens of carriers to choose from. You might be wondering where you can find the cheapest whole life insurance, but you want to also make sure that you choose a financially sound company. This is important because a portion of your premiums will be invested by the carrier and the returns that they make is what builds the cash value in your policy.
Here are some simple tips on how to find the cheapest whole life insurance rates as well as a financially strong company.
Work with an experienced agent. This is one of the most important parts of shopping for life insurance because the rates and underwriting requirements of life insurance carriers can vary greatly. The difference in premium from one carrier to the next can vary by as much as 30% to 40% for the same amount of insurance. There are so many places where you can find life insurance quotes so you want to make sure you choose a reputable company with a short and easy quote form.
Be upfront about your health and your needs. If you have high blood pressure or cholesterol or any other health issues, it is to your benefit to disclose it so your agent can steer you towards the carrier with the best rates for those conditions. By withholding information, you run the risk of being rated up or declined. This may not seem like a big deal and many people think they can just go apply to the next company, but a decline or a “rate up” will leave a permanent mark on your medical information bureau record and other insurance companies will be leary when they see it.
Choose a company with a solid financial rating and a good history of returns. With whole life insurance, the cash value that builds up in your policy is based on the returns made by the life insurance carrier. So it is important that you choose a company that is financially sound. Life insurance companies are given ratings based on their financial strength so be sure to ask your agent about the ratings for carriers that he or she recommends to you. Get a free quote today to compare multiple rates.
