At What Point Should One Stop Paying For Whole Life Insurance?
Whole life insurance provides coverage for an individual’s entire life, and the premium amount remains the same throughout the policy term. Unlike term insurance, you do not need to undergo a medical exam to re-qualify, and you can access multiple riders that aren’t available on term policies. Moreover, the cash value component of whole life insurance accumulates money over time, which is accessible while the policyholder is alive and grows tax-free.
However, whole life insurance policies are more expensive than term life insurance policies. The level of coverage selected plays a significant role in the premium rate, along with other factors such as the policyholder’s age, general health, and lifestyle habits. Additionally, certain features specific to whole life policies, such as the dividend rate, change the price.
While most people pay for whole life insurance until they pass away, the policy can be funded for a fixed term of 10, 15, or 20 years. However, funding the policy for a fixed term will substantially increase the policyholder’s monthly premium for those years.
Ultimately, the decision to stop paying for a whole life insurance policy is a personal one. If the policyholder decides to stop paying, the accrued cash value can fund the premiums until it runs out, and the policy will lapse. The policyholder can also surrender the policy, depending on the plan type.
Factors Affecting the Cost of Whole Life Insurance
| Factor | Description |
| Age | The younger the policyholder, the lower the premium |
| General health | Healthier individuals often pay lower premiums than those with pre-existing conditions |
| Lifestyle habits | Individuals who smoke or drink heavily may pay higher premiums |
| Level of coverage | The higher the coverage, the higher the premium |
| Dividend rate | A higher dividend rate results in a lower premium |
Overall, whole life insurance policies offer permanent coverage and a cash value component that can be accessed while you’re alive. While the policy can be funded for a fixed term, it will result in a higher monthly premium. The decision to stop paying for a whole life insurance policy is a personal one, and the policyholder should consider their options carefully before doing so.
