Whole life insurance is a form of guaranteed life insurance that comes with a savings counterpart to provide a little extra cushion through the difficult walk of life. It is more expensive as insurance companies look at this type of policy to pay the death benefit eventually, whereas with other types such as term life insurance that have a chance to expire before paying out the death benefit.
How does whole life insurance work?
You pay a monthly premium in exchange for the guarantee that the insurance company will pay a set amount to your beneficiary. Your premium also gets applied to a form of savings that grows over the length of your policy without being subject to taxation.
This option is often used as part of one’s retirement strategy, as it can provide policyholders funds when they decide that it’s their time to enjoy the fruits of their labor. Not to mention, certain policies pay out dividends which we’ll cover in the next section.
The Benefits of Whole Life Insurance
When it comes to your financial future, and the legacy that you leave behind, you have to make sure that the choices you make are the right ones. Here are the top three prevailing benefits of whole life insurance so that you can do exactly that.
· Dividends are paid out to policyholders with certain whole life insurance policies.
This is the way that insurance companies drive home a little more for their policyholders, even though they’re living and breathing. Keep in mind that this isn’t available with all whole life policies, so make sure to know what it offers before signing on the dotted line.
· Ideal for those who are wanting to add whole life insurance to their retirement plan.
Since this type of life insurance provides savings that grows over time without being taxed, it’s often used in retirement planning. If you’ve paid your premium over the years, it can provide you with access to cash when you need it. If you pass away before it’s paid off, no need to worry as the amount that is owed will be deducted from the death benefit.
· There is no chance for it to expire unless you don’t pay your premium.
This is the biggest benefit of whole life insurance, as it ensures that you have something that you can leave behind. No more worrying about whether you will end up outliving the length of your life insurance policy.
If you want to guarantee that you’ll pass on a death benefit to make life easier for those who are left behind upon your passing, this is definitely one of the better options. The ability for it to be used as part of your retirement planning makes it even more beneficial, even while you’re enjoying the beauty of life.