When Is The Premium Payment For Whole Life Insurance Completed?
Whole life insurance offers coverage for the rest of your life and includes a cash value component that lets you tap into it while you’re alive. Whole life insurance payments can be completed in various ways, including pay premiums on a regular basis, single premium, limited payment, and modified premium. Whole life insurance payments can be completed instantly (5 minutes or less), and the coverage can be up to $8 million. It is more expensive than term life insurance because people with a whole life policy are guaranteed to have a death benefit when they die.
Participating vs. Non-Participating Whole Life
Policyholders of whole life insurance are usually eligible for annual dividends from the life insurance company. If you’re buying whole life insurance, confirm that the policy is “participating” so that you can reap the benefits of dividends.
How Whole Life Insurance Works?
Whole life insurance works by first selecting the amount of coverage that best suits your needs. Once you have a policy, whole life insurance can remain in-force for your lifetime—as long as you continue to pay the premiums. Also, a cash value component will accrue over time.
You may find differences in how you can pay for a whole life insurance policy. You can tap into cash value with a withdrawal or a loan, or also by surrendering the policy. Outstanding loans and withdrawals will both reduce the amount of death benefit paid out if you pass away. When you buy a policy, you’ll choose a life insurance beneficiary to receive the death benefit. A major selling point of whole life insurance is that it will be in force until your death, as long as you’ve paid the required premiums.
When to Choose Whole Life Insurance?
Whole life insurance is good for people who want lifelong coverage, premiums that don’t change and a cash value component. Your beneficiary will get a life insurance payout no matter when you die, as long as you’ve paid the premiums needed to keep the policy in force. However, whole life insurance is unaffordable for many, and term life insurance is a better choice for people who want a financial safety net for a specific number of working years, such as the years of paying off a mortgage. Universal life insurance is another type of permanent life insurance. It might be a good fit if you want the ability to tap into the policy’s cash value and the flexibility to adjust premium payments and death benefits as your needs change.
Before purchasing whole life insurance, determine how much life insurance you need and compare life insurance quotes from multiple companies. Adding riders lets you customize a policy, but may also increase the cost. Keep in mind that life insurance rates rise with age and with declining health. A financial advisor can help you identify the companies likely to offer you the best quotes.
