Many whole life insurance policies can be considered "participating", which means that you could earn dividends based the company's financial performance. Your dividends can be used for a variety of purposes, including increasing your policy's cash value.
If you are looking to leave a financial trail, a whole life policy will provide financial protection for your loved ones as well as your favourite charity.
Whole life insurance, which is more expensive than term life, is the most popular type of permanent insurance. Because policies are designed to provide coverage that lasts a lifetime, and pay out no matter when you die, this is a common reason. A cash value component is also available for whole life insurance. The account grows as a result of the payment of a portion your premiums. After you have enough cash value, the account can be refinanced or you can surrender the policy.
Whole life insurance policies that are considered "participating policies" can earn dividends based upon the financial performance of the company. Dividends can be used in many ways, including increasing the cash value of your policy.
Although whole life is more complicated that term life, it's still simpler than other permanent types of life insurance. The premiums do not change over time, and the cash balance account grows at a fixed pace. Except for loans with large cash values, the death benefit cannot be reduced. Your policy does not require you to repay loans, however your insurer will subtract any outstanding debts from the final benefit to your beneficiaries.
To help you better understand the difference between whole life and term life, here's a brief overview on each type of coverage.
Whole life insurance costs more than term and is the most widely used type of permanent lifestyle insurance. The reason is that most policies offer lifetime coverage and payouts regardless how you die. There is also a cash value component to whole life insurance. A portion of your premiums goes into the account. This account grows over time. Once enough cash is built up, you are able to borrow against it or surrender the policy.
The best whole-life rates will depend on your age and health.
If you're just starting a career with a high potential earning future, purchasing your entire life as a young person will cost less and lock you in at a lower rate.
The term of your term life insurance should correspond to the financial obligation it covers. A 20-year policy might be appropriate for a parent who is a new parent. This will cover you until the child no longer depends on you financially. The best life insurance companies all offer term life. You can easily compare quotes and get life insurance online.
If you own a company and want to transfer liquid assets to your family.
Your whole-life insurance quotes will be more expensive if you are older, as your life expectancy drops with age. Rates will also be affected by the date of your policy's expiration, which is when all premiums have been paid.
You might be attracted to the idea of potential dividends and cash value, but this should not be your primary reason for living.
