There certainly are a lot of arguments that can be against or in favor of buying whole life insurance. In this article we may consider some of the drawbacks and benefits of whole life insurance.
3 Drawbacks of Whole Life Insurance
#1. Whole life insurance may not be the best way to invest your money.
A whole life cover policy usually does not defer a reasonable return on investment unless it is held for 20 years or more. Other investment options may give better returns on the money invested. You may also consider the fact that normally a whole life policyholder has no say about how and where the policy investments are done.
#2. Whole life insurance can be very expensive.
Paying level life insurance premiums may turn out to be more costly than term life premiums.
#3. Whole life insurance may become less important after the age of 65.
Life insurance is intended to care for your family which relied on your income before you passed away. The older you get the less important this becomes.
6 Benefits of Whole Life Insurance
#1. Whole life insurance provides death protection for your entire lifetime.
You are covered if you are listed in the policy as the insured. The appointed beneficiaries will receive the death benefit payment of the policy if you should die.
#2. Whole life insurance also includes an investment component.
The life insurance company may invest a part of your life insurance premiums in stocks or real estate for the purpose of generating raises in the cash surrender value of the policy. The cash surrender value is the amount of money you can receive if you decide to cancel your whole life policy before you die. The earnings on the policy’s cash surrender value gathers tax-deferred. You may also borrow money against the policy’s cash surrender value in the form of a policy loan.
#3. You typically pay a level premium for whole life insurance.
A level premium means that your life insurance premiums do not increase as you age, but rather stays at the same level.
#4. Whole life insurance policies may receive dividends.
Some life insurance companies may credit the policy’s investment portion with a dividend once a year. This will of course depend upon the individual life insurance company’s annual losses and gains.
#5. You may borrow against the cash surrender value of a whole life insurance policy.
You may borrow against the cash surrender value of a whole life insurance policy in the form of a policy loan at the current policy loan interest rate. Just remember that a policy loan reduces the death benefit and the cash surrender value of your policy.
#6. Whole life insurance assures you for your entire life.
You are insured for your whole life until you either pass away or reach approximately 100 years of age. You can enjoy life cover without the need for future medical assessments.
We have just discussed a number of the various drawbacks and benefits of whole life insurance in the above paragraphs. Remember to consider all the different options available to you and to choose the best life insurance for your needs.
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