Life Insurance
Life insurance is incredibly important, because it gives you and your family peace of mind. While we like to believe it would never happen to us, the reality is that unexpected (and uncontrollable) events can leave you unable to provide for your loved ones. In the event of your unexpected passing, a life insurance policy will provide your family with income to help pay for final expenses,cover the mortgage, or provide future college funds.
But all life insurance policies are not the same, and choosing the right policy for your situation can be difficult.
Whole Life Insurance
A whole life insurance policy can be the best option for those who want to provide their spouse and kids with long-lasting financial protection, because this policy never expires — once purchased,the payout is guaranteed, no matter how long it is until the insurer passes away. Premium payments never change with this policy, and can be made on a monthly, quarterly, semiannually, or annually basis — whatever works best for you.
Advantages of Whole Policies
Whole life insurance policies often include other benefits, including the following:
Access to the Cash Value
Whole life policies can be accessed for cash in a few ways. One option is take a loan from the policy’s cash value. This loan will be repaid with interest, but it can help you out when you need cash fast. Another option is to cash out the policy. This removes your coverage and ends the policy, but gives you cash based on how long you’ve been paying premiums on the policy.
Dividends and Excess Credits
Another way to get cash from your whole life policy is through the dividends that are often offered. These dividends are redeemable in cash, premium credit, or extra coverage, when the insurance company’s investments are performing well. This lowers the cost for you to remain covered.
Tax Advantages
Whole life policies offer a number of tax advantages. First, death benefits are usually not subject to federal and state income taxes, increasing the amount your beneficiaries receive. Second, the policy’s annual cash value gains are not taxed.
Family Coverage
With a whole life policy, you may additionally cover a spouse and/or children under a single policy.
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