Whole Life Insurance: Worry Free Protection

Do you prefer to keep your financial planning simple wherever possible? Guaranteed cost whole life is the simplest way of purchasing life insurance...

request no-obligation quotes >>

...It is reasonably priced if purchased while you are young, has a face value and premium that will never change, and builds cash value that you can borrow against in the event of an emergency. It also has optional riders that will allow you to include coverage on a spouse, children, additional coverage in the event of an accident, and waiver of premium in the event of a disability.

The down side to Whole life, if there is one, is that it takes several years to build cash value unless you choose to take a 10 year or 20 year pay. In those policies, the entire policy is paid up in the selected time period. Thus the cash value also builds faster. In most policies, the company calculates the premium so that the cash value equals the face value by the time the insured is 100 years of age.

In general, however, the following advantages will outweigh any disadvantages.

• You have a premium that will never change and a face value that will never decrease
  
  
• You can add riders to cover additional needs or member of the family
  
  
• You can choose to "pay it up" in a shorter time period, thereby increasing the cash value.
  
  
• If a time comes when you no longer need as much life insurance, you can exchange the cash value for an annuity, thereby stopping your premium but allowing your investment to grow more quickly.
  
  
• Your policy will have a guaranteed interest rate, although many companies may pay more. Thus, even when the economy is poor, your policy will not lose value.
  
  
• You will usually have the option of "automatic premium loans." This means that if you are unable to make a payment, your policy will automatically borrow enough from the cash value to pay the cost of insurance, thereby keeping your insurance in force.
  
  
• Interest is accrued on a tax deferred basis. Benefits are paid to the beneficiary tax free.

Possible disadvantages which can be eliminated if properly informed.

• Premiums will not be cheap if you wait too long. Purchase Whole Life while you are young for the best rates.
  
  
• Loans will cause a decrease in the face value if not repaid. Interest on loans can sneak up on you, resulting in a loss of insurance value or an unexpected premium payment to prevent a collapse for "loan insufficiency."
  
  
• Any gain is taxable if taken as a cash surrender.
  
  
• If surrendered in the first 10 to 15 years, you may be charged a substantial penalty.