Whole life insurance is a type of life insurance. It is sometimes referred to as permanent or traditional insurance. In this article, we will go over the basics of whole life insurance to help you determine if it is the right choice for you.
Whole life insurance provides coverage for the entire life of the insured. When the insured passes the insurance company will pay out a lump sum, known as a death benefit, to the beneficiaries. The death benefit is guaranteed if the premiums are up to date. These types of policies also have a savings component that will allow the policy to accumulate a cash value. You can withdraw or take a loan against the cash value of the policy while alive.
One of the main benefits of whole life insurance is the cash value. This acts like a savings account that allows you to earn interest and creates a value that you can borrow against. This gives you a benefit that you can take advantage of while you are alive. It is also an easy way for you to leave a guaranteed sum of money behind for your loved ones. It also gives you guaranteed coverage for the rest of your life without any need to pass any future medical exams. This prevents the loss of coverage later in life.
The main drawback of whole life insurance is the cost. Since the policy is guaranteed to payout, the insurance company must be sure to cover themselves from taking too great of a loss. They do this by charging high premiums. When shopping for an insurance policy, you must determine if the funds would be better used by purchasing a term policy and investing the savings. This will depend on your personal situation, but an investment advisor can help you to make the best determination.
Purchasing Your Policy
When shopping for an insurance policy it is important that you get quotes from several reputable insurance companies. This will allow you to get the best value for your money. You should also consult with a financial advisor to make sure the purchase is the best decision for your overall financial health.
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