Bring financial freedom to your loved ones after you die with whole life insurance. It stays with you throughout your entire life, providing a sense of comfort to policyholders and their families. Ideal for estate planning, whole life insurance is conducive to transferring your wealth to the next generation without suffering significant tax burdens. Similar to universal coverage, this policy also accumulates cash value.
Whole Life insurance is permanent life insurance that provides coverage for your entire life, provided that premiums are being paid. The insurance company will pay the beneficiary(ies) a lump sum upon the death of the insured person.
Whole life insurance coverage is intended to provide coverage for life so that the premium will remain the same throughout the policy’s lifetime. Unlike term insurance, whole life insurance premiums will never increase.
One uniqueness of whole life insurance is the cash value/savings component, where dividends can accumulate inside the life insurance policy on a tax-advantaged basis. This type of policy is often referred to as a traditional life insurance policy.
There are two types of whole life insurance plans: participating whole life which is also traditional whole life and non-participating whole life insurance. The participating whole life policy participates in the profit of the insurance company which are returned to the owner of the policy as dividends which are a refund of premiums. Non-participating whole life policies do not share in the profit of the insurance company therefore no dividends are paid to the owner of the policy.
When is the right time to buy a Whole Life Insurance plan?
You can purchase a whole life insurance policy anytime, depending on your individual financial needs and affordability. However, the best time to buy whole life insurance is when a person is young and healthy because premiums will be much lower than someone who is older and has pre-existing health issues.
How much whole life insurance cover do you need?
A person’s financial needs and affordability will often determine how much whole life insurance they can afford. Whole life insurance is one of the most expensive types of insurance. So it is often used as a basic coverage where other optional insurance coverage, such as a term insurance rider, can be added to ensure that the insured has adequate coverage.
What are the payout options in Whole Life Insurance?
Unlike a term insurance policy, whole life insurance policyholders may take out loans or withdrawals against the cash value of the policy while they are still alive.
After the insured person passes away, the whole life insurance death benefits can be paid in a lump sum payment to their beneficiaries or as an annuity where the beneficiaries choose to receive a monthly/annual payout.
What are the factors that can affect Whole Life Insurance premiums?
Life other types of life insurance coverages, a person’s age, health, smoking status, gender, and to some degree, occupation will impact their life insurance premium
What is a Whole Life Insurance Rider?
There are optional benefits that can be added to the life insurance policies such as term insurance rider, accidental death & dismemberment or a child rider.
Who shouldn’t buy Whole Life Insurance?
Individuals who are on a tight budget and are looking for temporary insurance, such as insurance to cover their mortgage, should not buy whole life insurance.
Who should buy Whole Life Insurance?
Whole life insurance can be purchased by anyone who has a permanent insurance need and affordability. For example, parents might purchase the whole life on their children because they want permanent insurance and cash value that they can transfer ownership to when they are financially responsible. Affluent individuals who want to preserve their wealth might purchase whole life insurance because they are looking for level premiums that will not increase and a permanent life insurance coverage that will payout a death benefit to pay estate taxes and create a legacy for their families
Which type of Whole Life Insurance cover should I get?
This will depend on what your financial needs are and what you are able to afford.
How much does Whole Life Insurance cost?
Premiums will depend on an individual’s age, smoking status, gender, health and insurance coverage amount.
What are the pros and cons of Whole Life Insurance?
Whole Life Insurance
PROS
- Provides permanent life insurance coverage
- Premiums are levels (does not change)
- Cash Value Accumulation over time.
- Loans can be taken against the cash values
CONS
- X Cost more to buy this type of insurance
- X Risk of being under -insured
- X Not suitable for short term insurance needs
FAQ
