So, What is Whole Life Insurance?
Whole life insurance is a product offered by licensed insurance companies which guarantees the premium, death benefit, and cash value. Generally, insurance companies will pay an annual dividend to its policy-owners which will be either to purchase paid up additional life insurance or distributed back to the policy-owner in the form of cash. There are varying opinions when it comes to global warming, vaccinations, & whole life insurance. Whole life insurance is a fairly basic product and only takes a few minutes to really understand how it works. Look at it from all angles, how the insurance company actually makes money, how mortality comes into play, how dividends work, and the importance of insurance interest.
Whole life insurance can be a great solution for people who are more conservative by nature and want another option when it comes to squirreling money away for the future. The guaranteed elements of the policy give piece of mind for people who don’t like risk, and also diversification amount asset classes. If you have the ability to afford whole life insurance, take a few minutes and figure it out.
Dave Ramsey, Suze Orman, and others say: “Buy Term & Invest the Difference”. Buying term and investing the difference is a concept that has been around for quite some time and there are several “pros” to buying term and investing the difference, such as the beneficiary would receive the death benefit AND the money saved in the alternate account. For example, if a forty-year-old were to purchase a one million-dollar twenty-year term policy for around one thousand dollars per year, and then pass away after ten years, the beneficiary would receive the one-million-dollar death benefit and whatever else they had in the alternate account. If a whole life insurance policy happens to be ten times the price of a term policy, the individual would have invested the difference of nine thousand dollars per year for ten years which would probably accumulate to a number between one hundred thousand to one hundred fifty thousand dollars. The beneficiary would end up receiving one million dollars of death benefit from the term policy, plus the money in the additional account. If someone is disciplined to invest the difference each month and only has a need for life insurance death benefit until retirement age, buying term and investing the difference is a great option. Whole life was designed to last for the entire life of a person. Too many people compare it to term but it is apples and oranges.
Don’t fall victim of purchasing either policy because of someone’s opinion, get the information and take a few minutes to think it through, decide if term or whole life is better for your situation. Whole life’s step brother is called universal life, which happens to be another style of permanent cash value life insurance. Universal life insurance can offer a guaranteed premium and guaranteed death benefit as well, if you are not concerned about building guaranteed cash value, consider a universal life insurance policy with a premium guarantee rider, it could be significantly less cost. Additionally, the current assumptions are usually more favorable on a universal life chassis.
If you need help and want to speak with someone about any type of life insurance give us a call. We are a group of knowledgeable independent insurance agents who will give you’re the facts without a bunch of fluff, you can set an appointment with Carter Gray CLU (charted life underwriter) by going to www.pacificinsurancegroup.com.