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Benefits of Whole Life Insurance

Life insurance is one of those things that you might think about from time to time, but put off purchasing, which could mean higher rates when you do decide to purchase a policy. Or maybe you have a policy through work, which will be terminated once you’re no longer working, or minimal, temporary coverage with a term life insurance policy. If you do have term life insurance, and you outlive your policy, you’ll need to buy another term policy, or to convert it into a more permanent policy, which can be expensive. So if you don’t have life insurance, or have a temporary policy, you might want to consider purchasing whole life or permanent life insurance now, while you can still get affordable rates.

How Does Whole Life Insurance Work?

Whole life insurance is a type of permanent life insurance policy that provides lifelong coverage, as long as you continue to pay your monthly or annual premiums. With this type of policy, your premiums will remain the same throughout the life of the policy and cannot be raised for any reason. One of the best things about this type of policy is that it has a cash value component, meaning your policy will build tax-deferred cash overtime at a guaranteed rate of interest.stack of cash

Whole life insurance is best for people who want a longer-lasting policy with a cash value that they can borrow from. It is also more suited to healthy people who are willing to spend a little more on premiums: you will have to undergo a medical exam to qualify for a whole life policy, and these policies are more expensive than term life policies.

Benefits of Whole Life Insurance

One of the great things about whole life insurance is that there are multiple types of policies that you can choose from. There are also many other benefits, including:

  • Peace of Mind- Your life insurance policy will last your entire life, so you will never have to worry about converting it as you would have to do with a term life insurance plan. And you will never have to worry about buying a new plan when your current one ends. You will have peace of mind, and so will your family.
  • Lifelong Protection– As long as you pay your premiums, you will have protection for your entire life, even if your health begins to decline or you develop new health conditions. Your life insurance company will not use your health against you.
  • Cash Value– Part of your monthly premium payments will go into a cash-value account, which will accumulate interest over time. Think of it as a tax-deferred savings account, which you can borrow against any time you need it.
  • Earn Dividends– Some companies offer whole life insurance policies that allow you to earn yearly dividends based on the company’s performance. You can receive your dividends as cash, they can be added to your account, or they can be used to pay your premiums.
  • Level Premiums– Your premiums will stay the same for as long as you have the policy.
  • Tax-Free Death Benefit– Whole life insurance policies are usually tax-free, which means your beneficiaries will not have to pay any taxes on the money they receive.

Looking for an Affordable Plan?persons hand putting a coin into a piggy bank

Your family has financial obligations that will not go away when you are gone; they will need your help more than ever with their expenses, and the last thing you want them to worry about is money while they are grieving. There are many great affordable life insurance options to choose from that will provide enough money for your family, for a low monthly price. The best way to find the right life insurance policy for you and your specific needs is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

When Is Whole Life Insurance Worth It?

There are a lot of different types of life insurance policies to choose from, and it can be confusing trying to figure out the right one for you. For example, whole life insurance, a type of permanent life insurance policy, is a more expensive policy than others, but it can be worth it for some people to spend the extra money on. It’s a type of policy that is worth looking into, but if you are considering purchasing whole life insurance, you’ll need to review what these policies entail to see if one might be right for your and your family’s needs. 

illustration of a man holding a large bag with a money sign on it
If you have a high annual income, then a whole life insurance policy is a better fit for your family.

If you are in the following situations, you might want to consider a whole life insurance policy:

  1. You have a high annual income, typically over $250,000, or have over $1 million in assets. Whole life will provide high coverage options, unlike other life insurance policies.
  2. You want premium rates that remain the same throughout the life of the policy. With a whole life insurance policy, there won’t be any premium rate increases due to your age, health, or any other changes to your circumstances.
  3. You would like the option of a cash value that you can borrow from while you are still alive. Borrowing against your policy would be like taking out a loan without any taxes on it.
  4. You would like lifetime coverage. Unlike with other policies, such as term life insurance, you will have coverage for the rest of your life, which will ensure that your family will receive the death benefits, as long as you have paid your premiums.
  5. If your family will have to pay a lot of taxes on your assets when you pass away, the coverage offered by a whole life policy would be enough to cover them and then some, so your family will not have to pay any estate taxes out-of-pocket.
  6. You have maxed out any other tax-deferred investment options, such as your 401k, IRA or Roth IRA. If this is the case, a whole life insurance policy will be a great way to provide more money for your family.

If any of the above applies to you, you should look into a whole life insurance policy. On the other hand, if you want a cheaper policy, and are only interested in a policy that will cover your debts, like your mortgage, for a limited period of time, a term life insurance plan might be a better fit. Or if you want a very economical policy with just enough coverage for your funeral and some debts, a final expense policy might be best for your needs. It all depends on what your priorities are, and how much coverage you need to make sure your family is financially secure in the event of your passing. life insurance policy on a paper next to a calculator and hand holding a pen

Your family has financial obligations that will not go away when you are gone; they will need your help more than ever with their expenses, and the last thing you want them to worry about is money while they are grieving. There are many great affordable life insurance options to choose from that will provide enough money for your family, for a low monthly price. The best way to find the right life insurance policy for you and your specific needs is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

Whole life VS Universal life insurance

Choosing the right life insurance policy for you is a big decision. You want to properly protect your family, and there are so many life insurance policies to choose from! A good place to start, though, is with the most popular types of life insurance: permanent and term life insurance policies. Of those two, permanent life insurance policies offer you lifetime protection, and have a cash value that builds over time, making them a great choice for many people. 

If you’ve decided that a permanent life insurance policy is the right way to go for you, you will still need to narrow down your options. For example, there are two main types of permanent life insurance policies to choose from: whole and universal. If you are considering a permanent life insurance policy, understanding the similarities and differences between these two policies can help you make the right choice.

Whole Life Insurance

This type of life insurance policy is the most common type of permanent life insurance. Whole life policies have a fixed premium, which means your premium payments will remain the same for the life of the policy. In addition, your cash value will continue to grow at a steady rate, and once you meet a minimum required cash value, you can borrow against it, similar to taking out a loan.

The benefits of whole life insurance include: illustration of an infinity sign with the cycle of life

  • Peace of mind throughout your whole life, as long as you pay your premiums.
  • You can borrow against your cash value if you need money.
  • Your family will get a guaranteed death benefit that will not fluctuate.
  • Because premiums don’t change, your payments will be easy to budget for. 
  • Any cash value growth is tax-deferred.

Universal Life Insurance

Universal life insurance is another type of permanent life insurance that you should look into if you’re considering a permanent life insurance policy. With this type of policy, your monthly premiums are divided between maintaining your death benefit and growing your cash-value account. The insurer will set a minimum premium and if you choose to pay more, that money will go towards helping your cash value grow faster. In addition, your insurer will set a minimum interest rate when you purchase your policy, and your cash value will grow based on current interest rates. Your interest rate can go up and down based on the market, but it will never go below the minimum rate.

The great thing about universal life insurance is that it offers more flexibility than most types of policies. For example, you have the flexibility to adjust how much you pay for your premiums by accessing some of your built-up cash value: after your cash value grows to a certain amount, you can use it to pay premiums, or you can leave it alone to continue to grow. You also have more options with universal life than with whole life insurance: for example, you can choose a level premium and death benefit, meaning your payments won’t change, or you can choose an adjustable plan, allowing you to raise or lower your premiums. 

The benefits of universal life include:

  • You can skip premium payments if you have enough cash value built up to cover your payments. 
  • You’ll have the flexibility to change your premiums and death benefit if you cannot afford your premiums.
  • Your cash value can grow faster if interest rates are high, and any interest you earn from your cash value will not be taxed until you withdraw it.

Which Should You Choose?

When trying to choose between whole life insurance and universal life insurance, there are some things to consider. Specifically:

  1. Would you like flexibility or to stick to a set monthly budget?– Whole life insurance premiums stay the same, but universal life insurance premiums can change.torso of a woman holding a tablet with a bar graph moving upward
  2. The earning potential of your policy– Universal life insurance premiums are less expensive than those of whole life insurance, because you take a higher risk with your interest rate, and might earn less in interest than with a whole life insurance policy. 
  3. Are your finances secure? If you have a set budget and can afford whole life insurance, it might be a great fit. However, if you need flexibility in case your life changes and you need to make cuts, universal life is great because you can adjust your premiums.

Both policies offer you and your family protection for your whole lifetime, and both have their own set of unique features and benefits. Finding the right permanent life insurance policy comes down to your financial situation and your family’s needs. If you are looking for more flexibility,  a universal life insurance plan is best for you, but if you would like to stick to routine monthly premiums that you can budget for,  whole life insurance is best. Or, if you would rather stick to a fixed interest rate and a set death benefit, rather than taking your chances on how well the market is doing, you’ll want to stick with whole life.

The best way to find the right life insurance policy for you and your specific needs is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

Set It & Forget It: Single Premium Whole Life Insurance

Let’s face it, there are a lot of different life insurance policies out there to choose from – in fact, there are so many that it can become overwhelming trying to find the right one for you. How do you choose? Start by narrowing it down this way: if you want life insurance for a specific amount of time, you can choose a term life policy, but if you want a more permanent policy, whole life insurance is the way to go. 

Whole life insurance is the most common type of permanent insurance policy, and rightfully so- there are so many great benefits to these policies. If you decide to go the whole life insurance policy route, the next step is to check out all of the different whole life insurance policies that are available. You can choose from policies like level premium whole life, limited payment whole life, and single premium whole life insurance, which is the type of policy we will focus on below, so you can decide if it might be right for you.

Single Premium Whole Life Insurance

hundred dollar bills in a large stack
Single premium whole life ,gives you the opportunity to pay for your policy in a single upfront lump-sum.

Single premium whole life is permanent life insurance that covers you until you die. But unlike with other types of whole life insurance, with which premiums can be paid on a monthly or annual basis, with single premium whole life, you can pay for your policy in a single upfront lump-sum. In return, you receive a guaranteed death benefit amount; these policies also have a cash value that will grow over time, and that you can borrow against. 

For example, a single premium whole life policy might have one $25,000 premium at the start of the policy and no more payments will be needed after that. When it comes to how much the death benefit will be, it will depend on the amount of money invested, as well as your age and health when you purchase the policy. 

The Benefits

Having the ability to pay your premium off at once and not having the hassle of monthly or annual payments is a great plus, since you will not have to worry about forgetting or being unable to make a payment and losing your policy forever. Not only that, but there are tax benefits to whole life: you can pass on death benefits to your family tax-free without the time delay and expense of probate. In addition, in some cases, you will have tax-free access to the death benefit to cover any long-term care costs (although there are cases when you might have to pay some tax, more on that below), which can protect your other assets so you do not have to dip into them. If you do choose to use part of your death benefits for long-term care expenses, the death benefit remaining in the policy when you die will pass income-tax free to your beneficiaries. And if you don’t use any of it, the money will go to your loved ones just as you had originally planned.

Another benefit to making one upfront premium payment is that the cash value of the policy will be larger than with other types of policies, because the policy is fully funded from the start of coverage, so the value can grow more quickly. For example, if your premium is $30,000, some of this will go to fees, and some of it will  go into the cash value: if the cash value is $20,000 (after the fees are paid), and you were guaranteed a 3% interest rate,  the policy will grow $600 in the first  year. 

How You Can Withdraw Money

atm machine
If you want to withdraw money, you have to take out a loan that can be up to 90% of the policy’s cash surrender value.

The only way to withdraw money from the cash value of a single premium whole life insurance policy is by taking out a loan. The loan amount can be up to 90% of the policy’s cash surrender value (cash surrender value is the sum of money an insurance company pays to the policyholder or account owner upon the surrender of a policy/account). Insurance companies usually have a minimum amount that you can take out, so be sure to check that out. You can typically withdraw 10% of the premiums paid, or 100% of the policy’s gains (whichever is higher) in each calendar year without having to pay a surrender charge. 

It is important to note that if you withdraw cash from the policy, either as a loan or partial surrender, there will be some tax implications. Because this type of policy is considered a modified endowment contract (MEC) by the IRS, meaning that it has been funded with an amount of money that exceeds federal limits on policy funding, withdrawals are subject to income tax on the earnings. Typically there is a 10% IRS penalty on all gains withdrawn or borrowed before age 59½. You will also have to pay income tax on those profits, and if you cash in the policy, the insurance company might hit you with a surrender charge.

Is This Type of Policy Right For You?

Single premium whole life insurance is best for someone who has the ability to pay their premium all in one shot, and who wants a tax-sheltered legacy that their family can receive when they are gone. These policies are a great way to maximize your cash value growth so you can use that money as you get older and possibly require long-term care. If you are considering a single premium whole life insurance policy, you should first consider if you can afford it, how much coverage you will need, and any riders you would like to add on. 

The best way to find the right life insurance policy for you and your specific needs is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

The Different Types Of Life Insurance Policies

Shopping for a life insurance policy can feel a little bit overwhelming, because there are so many different types – but the upside is that, with so many options, you’re sure to find a policy that fits your needs and budget. If you’re not sure where to even begin, we have listed multiple types of life insurance policies, how they are different from each other, and what you can expect from each, in order to make the process a little easier and less stressful for you. 

Term Life Insurance

illustration of a person walking with 3 arrows in front of him
Term life insurance is great because it offers you insurance for a duration of time, and there are different options to choose from.

Term life insurance is one of the most affordable types of life insurance available, but these policies only cover you for a limited period of time (or term), generally anywhere between 5 and 30 years. This type of life insurance is best for people who want coverage for large expenses such as mortgage payments, college tuition, and other debts, usually those who are younger or middle-aged and want to be able to replace income in case of an unexpected death. One of the great things about term life is you can convert your policy to permanent life insurance before it expires without having to go through medical underwriting again.

There are different types of term life insurance policies to choose from including:

  • Level term life insurance: Your premium stays the same for the entire term
  • Decreasing term life insurance: Your death benefit decreases as the debt amount decreases
  • Annual renewable term life insurance: Allows you to renew your term policy for one year at the end of the initial term
  • Return of Premium life insurance: All premiums paid will be refunded if the policyowner outlives the policy term

Whole Life Insurance

Unlike term life, a whole life insurance policy lasts for the entire life of the policyholder, as long as you keep up with the premiums payments. With this type of policy, premiums will remain the same throughout the life of the policy and cannot be raised for any reason. One of the best things about  this type of policy is that it has a cash value component, meaning your policy will build tax-deferred cash over time at a guaranteed rate of interest. 

Whole life insurance is best for people who want a longer policy with a cash value that they can borrow from. Be aware that you must undergo a medical exam to qualify for a whole life policy, and that these policies are more expensive than term life policies.

Universal Life Insurance

coins in a row growing, with the last one with a branch on top of the stack
Universal life insurance has a cash value that grows over time.

Universal life is similar to whole life insurance in that it is also a type of permanent life insurance with a cash value that grows over time. This type of policy will not only provide you with lifetime coverage, but the premiums are flexible, meaning that you can modify your monthly premium when needed, as well as increase or decrease your death benefit to accommodate different life events. 

Premiums for this type of life insurance policy are generally higher than those for term life, because of the above features. It is best for people who prefer affordable permanent life insurance and want the ability to accumulate cash over time. With this type of policy you will need to undergo a medical exam, as well.

Variable Life Insurance

Variable life is a type of universal life insurance that also builds up cash value over time, but instead of earning a fixed rate of interest determined by your insurance company, the interest it earns is based on the performance of an investment account. You can withdraw cash from the policy through policy loans that are considered tax-exempt, but you can lose your cash value if the market performs poorly. This type of life insurance is best for people who are looking for permanent life insurance that builds up cash that can be used as a tax-exempt income. Premiums are based on your medical history, so you will have to undergo a medical exam. 

Simplified Issue Life Insurance

With this kind of life insurance policy, you do not have to undergo a medical exam, meaning policies will typically be more expensive because the insurer is taking a risk by insuring you without knowledge of your medical history. On the other hand, though, you don’t have to worry about being approved, and you will be able to get a policy in a matter of days as opposed to weeks or months. This type of policy is best for people who need coverage quickly, as well as for those who have pre-existing medical conditions and are afraid they might get denied any other type of coverage.

Guaranteed Issue Life Insurance

Like simplified issue life insurance, guaranteed issue life insurance is a whole life policy that will provide insurance without requiring a medical exam. As long as you are within the eligible age requirements, you can purchase one of these policies, but it will cost more than traditional life insurance because of the risk the insurer is taking, and will generally only provide $25,000 to $30,000 in coverage. 

hourglass with blue sand in it dripping down
Guaranteed life insurance has a 2 year waiting period before the death benefit is paid.

There is one other caveat to this type of policy: there is a two-year waiting period before the full death benefit is payable to the beneficiary. This means that, if the policy owner dies within 2 years, the insurance company will only pay out 110% of premiums paid (as long as the insured dies from natural causes), instead of the agreed-upon death benefit. Guaranteed issue life is best for people who cannot qualify medically for traditional life insurance, but would like the opportunity to cover their loved ones when they are gone.

Final Expense Insurance

Final expense insurance is generally bought to cover funeral expenses, burial expenses, and any other medical debts you may have. There is no medical exam required, and it is relatively affordable, but the death benefits are usually capped at $35,000.

Joint Life Insurance

Joint life insurance will provide coverage for you and your spouse. You can choose from a  universal or whole life policy, but the death benefit is usually not paid out until both policy holders have passed away. A lot of couples will choose this option because it is cheaper than purchasing two separate policies, and the underwriting and rates are based on the younger and healthier partner.

Your family has financial obligations that will not go away when you are gone; they will need your help more than ever with their expenses, and the last thing you want them to worry about is money while they are grieving. There are many great affordable life insurance options to choose from that will provide enough money for your family, for a low monthly price. The best way to find the right life insurance policy for you and your specific needs is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

What is Insurable Interest in Life Insurance?

When many people think of life insurance, they think of purchasing a policy that will benefit their loved ones after they pass. But have you ever considered purchasing a life insurance policy on another person who you are financially dependent on? If you buy a policy to insure another person’s life that means you will be the beneficial owner, and will receive the benefits after the insured person dies; in order to purchase a policy and get the benefits, though, you will have to prove an insurable interest in, or financial dependency on, the insured person. Before you decide to buy a policy, you need to understand what insurable interest is, and know how you will have to prove it. 

What Is Insurable Interest?

african american man and woman looking at each other
You can take out a life insurance policy on a loved one as long as you can prove insurable interest.

When it comes to purchasing life insurance, you can’t take a life insurance policy out on just anyone: if you want to buy a life insurance policy on someone else and be considered the beneficiary, you have to be able to show an insurable interest in that person, which means that you would experience a financial loss or other hardship in the event of that person’s death. A good example of people with insurable interest in each other would be spouses wanting to protect themselves from loss of income, or business partners wanting to protect their business from financial loss.

Proving Insurable Interest

Before a life insurance company will allow you to purchase coverage on another person, they will take steps to verify insurable interest, which will usually include requesting identification from the people involved and conducting a phone interview. During this phone interview, the insurer will ask about the relationship between the beneficiary and the insured, because you can only take policies out on certain people. Relationships that guarantee insurable interest are:

  • Certain essential employees–  You can prove that you have an insurable interest in employees who are considered executives, such as the CEO or president of your company, or your business partners, because if  they were to pass away your business would experience a loss of profits. Purchasing what is known as business life insurance is  common practice.
  • Immediate family members–  It is easy to prove insurable interest in parents, children, siblings, grandparents, and spouses.
  • Debtors–  Creditors can ensure debtors, as long as the debtor consents to the coverage.

Other Relationships

extended family silhouettes with a city background
Normally extended family members cannot claim insurable interest unless they have proof of dependence.

As stated above, insurable interest is easy to prove for immediate family members and people who you have a business relationship with; it is harder to prove an insurable interest in other people and, unless you have proof of financial dependence, you will have a much harder time insuring:

  • Aunts and uncles 
  • Cousins
  • Nieces and nephews
  • Stepchildren and stepparents

Insurable interest protects the insured, as well as the insurance company, from insurance fraud, so when applying for a policy, you will have to prove your relationship to the insured, and that you are at risk of financial loss if the insured passes away.

If you are looking for a life insurance policy, either for yourself or someone that you are financially dependent on, know that there are many different kinds of policies to choose from, like whole life insurance, term life insurance, and final expense insurance. If you’re not sure where to begin looking for a policy, consider using online tools, or speaking with an agent. The right policy for you is out there! We have provided the top insurance companies that offer life insurance policies below; each can give you hassle-free assistance and the most competitive rates in the nation. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

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