Life has lots of surprises. From accidents to illnesses, life can bring a lot of uncertainties. However, don’t let these uncertainties pin you down. Take a whole life insurance policy and cushion yourself with these uncertainties. However, before taking whole life insurance. It’s important to understand the basics. In particular, understanding the key elements of life insurance will help you make an informed decision. Here are the top 3 elements of any whole life insurance policy.
Defined as a permanent based cash value policy, whole life insurance is designed to offer coverage for the whole life. It doesn’t have specific term limits. Nobody can cancel a whole life policy as long as you pay all your premiums. This type of policy offers you coverage that runs throughout the time you are living in this world. Plus, it covers all your beneficiaries. The benefits of whole life insurance are tax-free.
It Earns Cash Value
Whole life is designed in such a way that it can earn you a cash value. Remember, there is a portion in your premium set aside for insurance coverage. The remaining amount is allowed to accumulate—which acts as cash value. This component—also known as cash value/ loan value—can build up over time. However, it’s important to note that loans taken against your whole life policy will decrease the benefits and even accrue interest. However, many people have taken loans against a whole life policy for different needs.
The Offers of Whole Life Insurance
Whole life insurance comes with different offers. Here are a few offers associated with whole life insurance:
Level premiums: In whole life policy, your premium tends to remain the same for your entire life. Your current age or health doesn’t affect the level of premium you pay.
Death benefits: When you die, the beneficiaries in your policy will receive the face amount. However, the death benefit will be subjected to the outstanding value loans as well as interests.
Cash value: The cash value in your whole life policy will grow on a yearly basis—albeit tax-deferred. Even more, this policy gives you a chance to borrow against that cash value of yours. Thus, you can use it to secure loans to finance important projects in your life.
When to Take a Whole Life Insurance
Here are instances where taking a whole life insurance policy can be a nice decision:
- When you want an easy to outlive the policy
- If you are looking for an insurance policy that can form part of your lasting financial planning
- You want a policy that can help you build a long term cash value
Pro Tip: Before choosing whole life insurance, read a review of the best insurance companies.
With so many uncertainties in life, it becomes increasingly important to take whole life insurance. Among other things, whole life insurance will your beneficiaries when you are gone. With whole life insurance, you can also have a cash value and even take loans against your policy. However, it’s important to understand the key elements of your whole life insurance. The above are key elements to expect in whole life insurance.