Whole Life Insurance Tips

Before deciding which kind of life insurance policy is best for you, you must know the key aspects of whole life insurance and how it will be beneficial for you. With a whole life insurance policy you can make your loved ones financially secure in the event of your death. Simply speaking, life insurance helps your loved ones by paying them upon your death.

What is whole life insurance?

Whole life insurance is a permanent life insurance, which covers your whole life with timely premium payments as long as you live.

With increase level of premiums and cash values, this life insurance policy will be the best choice for long-term goals. The amount of guaranteed cash values could provide money to help during emergencies or temporary needs.

Features of Whole Life Insurance

1. Premiums generally are level and payable for life: In the starting premiums will be little higher than a term life insurance but as you go elder, the less expensive will be your annual premiums.

2. Dividends: Dividends are not guaranteed with whole life insurance but there is a chance of earning dividends.

3. Guaranteed Cash Values: In case of term life insurance, there are no cash values but with whole life insurance some money will be stored as cash values. If you give up the policy, accumulated guaranteed cash values would be yours. You can even take loan against your whole life insurance policy.

Before signing up with a whole life insurance policy, you should ask following questions to the agent appointed by Whole Life Insurance Company.

1. Which insurance is best for me, Whole Life Insurance or term life insurance?

2. How much coverage do I need?

3. How and how much discount can I get?

4. What are your Standard & Poor’s ratings?

You must consider following aspects while choosing a Whole Life Insurance Company.

1. Expenses and commissions.

2. Guaranteed cash value.

3. Dividends and interest.

4. How do they adjust the death benefit?

You can get any necessary information from online life insurance companies with the help of fast online Internet access. Fast online Internet access and web sites available make you easily compare and get Whole life insurance online quotes.

Term Life Insurance Definition

Term Life insurance has been with us for a long time. It is the least expensive of all the life insurance policies. Term life insurance is life insurance that provides protection for the named insured over a stated period of time. That is what differentiates it from other forms of life insurance. Term insurance has no equity or cash value accumulation and so it is primarily purchased for the security provided by the death benefit. There are three basic forms of term life insurance.

1. Decreasing Term – This policy is most commonly associated with mortgage protection insurance. The face amount decreases over a stated period of time. A thirty year mortgage for a homeowner is appropriately insured by a thirty year decreasing term policy for the same mortgage amount. The mortgage balance and the term policy decrease at about the same rate and so the homeowner can be assured that his home will be paid for whether he or she lives or dies.

2. Level Term – Level term insurance also provides protection for a specific time period. The face amount remains level throughout the stated period. This policy is often purchased for short term debt or intermediate term debt. You can purchase 5, 10, 15 and 20 year term policies from most insurance companies.

3. Annual Renewable – This form of term insurance is the least recognized of all term policies. It provides a level amount of insurance but the premium increases each year at the policy renewal date. The premiums can be very low at first but can escalate into very high premiums as the insured gets older.

All of these term life insurance policies have there advantages but the common denominators that give term life insurance its definition remains the same. The policy is always for a stated period of time and there is no equity or cash value accumulations. Those two features define term life insurance.

Term Life And Whole Life Insurance

Which type of policy is best for you, term or whole life? The answer depends on several factors, including:

Your Needs. If you need coverage only until your children graduate from college, for example, you might be better off with a term life policy.

Cash-value insurance is better suited for long term needs, such as planning estate taxes and providing lifetime security for your spouse. Some term policies cannot be renewed past age 70 or 80 and can become costly to renew as you approach that age.

The Cost. If term life insurance is more suited to your budget and you want life time coverage, consider a term life policy which can be converted into a whole life policy. Then you can convert the policy whenever your cash flow or needs dictate. You can also purchase a combination of term life and whole life insurance and gradually shift into whole life insurance over time.

Your Savings and Investment Goals. Whole life insurance can be a good long term investment vehicle, especially because the cash value has the potential to grow tax-deferred. Should you no longer need the insurance but want some extra cash, you may surrender the policy and collect the accumulated cash value. Be sure to discuss the tax consequences with your tax advisor first.

As an alternative, you could purchase term life insurance and invest what you save on premiums on your own. Compare the returns you can expect, and remember to take taxes into consideration if you plan to select taxable investments.

So, Should I Buy Term Life or Whole Life Insurance? Term life and whole life insurance both have advantages including immediate family protection. Deciding which type of policy and which features are right for you takes careful consideration and, most times, a comprehensible look at your financial plan. To discuss your life insurance needs and financial requirements, contact your financial professional.