We can take comfort in knowing that we all will ultimately pass away. Nobody can escape the eventual end of their life, but they can prepare for it. Knowing you want to invest in life insurance means that you are already one step ahead. Professional life insurance agents have been trained in the art of helping individuals find the best whole life insurance policy that will best fit them and their needs. However, you may be wondering what exactly whole life insurance is and its possible benefits. This helpful guide will help outline whole life insurance policies and how they can do more than help with your death costs.

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What Is Whole Life Insurance?

This type of permanent life insurance, referred to as whole life insurance, is a policy put in place to cover you for your whole life. While this life insurance policy is most often put into action after someone has passed away, it can also be used for other means while you are still alive. Many individuals who are considering life insurance policies are actually not aware of this fact.

A whole life insurance policy can be thought of as an additional savings account. This means that you can utilize your whole life insurance policy as a means to borrow against when you want to get a loan and use it as a tool for investments. This is possible by using the cash value amount of your whole life insurance policy.

Whole Life Insurance vs. Universal Life Insurance

Two different kinds of permanent life insurance policies are whole life insurance and universal life insurance. Although they are often confused with each other, there are differences between the two. Below, we will examine the differences between whole life insurance policies and universal life insurance policies.

Both whole life insurance and universal life insurance have tax-deferred death benefits. This means that the plans are useful and often most useful when the policy-holder has passed away. Whole life insurance has one set premium level for the duration of the policyholder’s life, while universal life insurance is more flexible and has more options for customizing premiums.

Who is Right for Whole Life Insurance?

Whole life insurance may work best for those who are younger and want to utilize a life insurance plan as a financial investment tool and have a savings plan. However, whole life insurance policies are not just for the younger generations. Anyone who wants to make sure their death does not have a significant financial impact on their family can benefit from a whole life insurance policy. This plan can help cover the expenses surrounding death and funeral costs.

What Does a Whole Life Insurance Policy Cover?

Whole life insurance policy coverage is basic because it only covers one thing. That one thing is your life. For instance, an insurance policy covering your car may cover fender benders or an accident. Unlike replacing a car, you cannot replace your life. So, whole life insurance only covers your death, which can help cover the costs associated with someone passing away. Costs that surround an individual’s death can become quite expensive, proving that a whole life insurance policy can be beneficial for many.

What are the Benefits of a Whole Life Insurance Policy?

A whole life insurance policy is the one that is most frequently chosen, as many benefits surround instating the policy. A few of those benefits are outlined below.

  • Interest Rate – The interest rate for whole life insurance policies is guaranteed. This means that you have a guaranteed return rate, and it will not change over the course of your plan.
  • Insurance Premium – Your monthly or annual premium amount will also be guaranteed. This means that it will not change over the course of your plan.
  • Death Benefit – When you choose your plan, you will select a death benefit amount. This amount will be guaranteed to you when you pass away and will not change.
  • Cash Value Accumulation – The cash value accumulation part of your policy is also guaranteed. This means that the cash value you have built up over your policy will be guaranteed to you.
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What is the Cash Value Account?

When it comes to the cash value account, some policy-holders are met with confusion. The cash value is what has accumulated as part of your policy, and you can do a few different things with this amount that you have built up.

One thing you can do with this cash value is to let it continue to build up until you have passed away. This means that you will not have the opportunity to spend this money, but your beneficiary will have access to that money. This means that the beneficiary can use this money as they wish, which may cover death expenses.

Many individuals also utilize the cash value to use once they have retired. Typically, policy-holders do not withdraw the entirety of the account and only take out a portion to use. Another option would be to borrow portions of the cash value and then pay it back later.

How Much Does a Whole Life Insurance Policy Cost?

Whole life insurance policy costs can vary depending on many different factors. Once a price is determined, your policy rates will never go up or down because they are fixed. Typically, those who are younger generally have lower premiums. Other factors that can influence cost include your health and how much coverage you would like.

Nobody wants to be a financial burden on their loved ones when they pass away. A whole life insurance policy can be an excellent option for not only your retirement but also to cover expenses once you have passed away. Speaking with a professional agent can help you determine how much coverage you need and the best options for your individual needs.