Whole Life Insurance Pros and Cons
Life insurance is a necessity to ensure your family can continue to pay bills, meet standard living costs, and look after their healthcare in the event of your death. No one likes to consider death, but it is essential in today’s society that we at least take a peek at this issue.
What’s your life worth?
Well, how long is a piece of string? This is a very difficult question to answer and that is why you will need expert help in choosing the right life insurance policy for your needs. The policy will have to be enough to at least pay off any mortgage left on a property. It may also need to pay any debts, existing or incurred through death. Additional amounts can ensure your family does not need to think about going out to earn when they should be grieving. This will give them breathing space.
Some people choose whole life insurance, as this pays out a sum agreed on at death and an additional cash benefit that grows as your premiums are paid. Other life insurance policies include, term life assurance (cash payable after a period of time, more usually, 25 years) and variable life insurance (cash sum payable at death and investment sum payable). For the purposes of this short article we will focus on the whole life insurance.
The pros of whole life insurance
One of the positive aspects of whole life insurance is that it will run its course for the whole of a person’s life, not just part of it. Additionally, the premiums will remain relatively level and stable throughout the period too. It has an inbuilt savings plan as well as a fixed amount payable on death, whenever that occurs. A whole life insurance plan can be redeemed in part if the policy is cashed in or no longer needed before death occurs. However, you will only receive a proportion of the cash plan and nothing of the death benefit.
Another great benefit is that the insured person can borrow from the cash plan if there is enough money in there. This can be a godsend in the event of a large bill or financial outlay showing up and there is no other means to pay it. This would not affect the death benefit.
The cons of whole life insurance
One of the downsides to whole life insurance is that the premiums are often higher than with level term assurance, for example. However, do bear in mind that this type of insurance covers your whole life and not just a part of it. Taking a level term insurance means premiums may be lower, but once the allotted time has arrived (25 years, for instance) you would have to top up the insurance to continue a further period of time, and premiums may rise substantially then.
With whole life insurance you are not in control of the investment of the savings. Therefore, you are at the mercy of the investors and if you have ethical issues or certain programs that you would rather not invest in, these will not be taken into account, unless of course you can find a company with a similar outlook.
In a nutshell
On the point of balance, if you are able to choose the kind of life insurance policy to give peace of mind to your loved ones, then whole life insurance is a good plan. There are many companies that offer this kind of insurance and as long as you continue to pay the premiums, then you can be sure of a lump sum payable to surviving family members on your death, in addition to whatever cash sum has accrued, minus the relevant taxes. This kind of policy will pay out no matter whether you die within the first few years or 50 years later.