The Benefits Of Whole Life Insurance

Whole Life Advantages And Disadvantages

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What are the benefits of whole life insurance? Is there a significant advantage to buying this type of policy? It cost considerably more than any term policy, is the difference in cost worth it?

Before attempting to appreciate the benefits it is important that we consider why whole life costs more. Whole life covers the insured up until age 100. This is coverage for the rest of your life. Term policies cover you for specific and significantly shorter periods of time.

When you die, regardless of how you die, your whole life policy will pay it's face amount to your beneficiaries. You could die of old age, it is still going to pay. The higher cost of this policy is a result of the fact that you will keep it longer.

Age and health are two of the things that affect life insurance premiums. The older you are the more it costs. As you get older your health tends to deteriorate. The life insurance company will be at risk for a very long time, thus the higher premium costs.

What are the benefits of whole life insurance? Whole life has a guaranteed cash value built in. How does this work? After charging you the high premium because they expect you to keep the policy for a long time the life insurance company looks back. You have owned your policy for a few years and you didn't die.

The life insurance company returns a portion of your premium. This is called a cash value. This cash value is really a return of premium. As the years pass the cash value grows to a considerable sum. If you own a participating policy and earn dividends your cash values plus dividends are likely to total more than you paid in, eventually.

You have many dividend options. You can leave your dividends to accumulate interest, they can be used to purchase paid up additions, they can be used to reduce premiums or they can be paid to you in cash each year. Keep in mind though that dividends are not guaranteed. They depend on the effectiveness of the companies investments and how well it does in keeping down expenses.

You be the judge, is whole life insurance worth the extra premium cost?

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